Internet Auction giant eBay has announced it will sell a majority stake of Skype - amounting to 65 percent of the unit - in a deal with $1.9 billion. The majority stake is being bought up by a group of private investors. The deal values Skype at $2.75 billion, which is less than the $3.1 billion that eBay originally spent on Skype.
Shares of eBay fell more than 2 percent after the news as many analysts are worried that the deal, which was worth more than was generally expected, might curb the growth potential of eBay. The auction site said that selling a majority stake in Skype enables it to focus on its own service and PayPal, and to avoid potential risks of the initial public offering it previously had announced.
Kaufman analyst Aaron Kessler said in a research note that selling the company's fastest growing business was clearly going to impact its potential for growth, even if the price being paid for the service is great short term news for eBay. It brings back a recurring question however about eBay's future as it continues to face competition from its main rival Amazon Inc.
The group of buyers includes Index Ventures, the Canada Pension Plan Investment Board (CPPIB), Silver Lake and Andreessen Horowitz.
Kaufman analyst Aaron Kessler said in a research note that selling the company's fastest growing business was clearly going to impact its potential for growth, even if the price being paid for the service is great short term news for eBay. It brings back a recurring question however about eBay's future as it continues to face competition from its main rival Amazon Inc.
The group of buyers includes Index Ventures, the Canada Pension Plan Investment Board (CPPIB), Silver Lake and Andreessen Horowitz.
