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comprehensive legal services for businesses call 201-957-0874

Microsoft acquires Skype for $8.5 billion

The business world was buzzing this week over the acquisition of EBay-owned Skype by Microsoft Corp. The acquisition was official as of Tuesday. In the deal, Skype was purchased from investors for $8.5 billion.

Skype originated as a start-up in Estonia in 2003. The company allows people from anywhere in the world to call anyone else around the planet through the Internet. It is the most popular such service in the world.

Analysts have said Microsoft's reasons for the acquisition are to better compete with Google Inc. in Internet advertising and to bring Skype users to the combined company (and away from online competitors), according to an article on the deal by Bloomberg. Microsoft is also in competition with Facebook and Apple.

EBay says that they will make $1.4 billion in profit from the sale of the company after purchasing it 6 years ago. According to Bloomberg, EBay announced that this profit was a more than 50 percent return on the investment they made through purchasing the Internet-calling start-up.

EBay purchased Skype in 2005 for $2.6 billion. At the time, the Internet auction site outbid Yahoo! and Google to make the purchase. While profitable, the acquisition was not as profitable as EBay had hoped. According to Bloomberg, a plan for Internet calls to be available for buyers and sellers on EBay did not happen. California-based EBay sold 70 percent of Skype in 2009 to investors. The largest owner was Silver Lake, and Microsoft acquired Skype from Silver Lake for $8.5 billion.

Source:

EBay to Make $1.4 Billion on Skype (Bloomberg)

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