BUSINESS

eBay to acquire Skype for $2.6 bn

September 12, 2005 18:03 IST

eBay Inc said on Monday that it will acquire Internet communications company Skype Technologies SA for about $2.6 billion in up-front cash and eBay stock.

The total value of the deal may increase based on "potential performance-based consideration," eBay said.

The acquisition will create "an unparalleled e-commerce and communications engine" for Internet users worldwide, the online auction company said.

The deal comes on the heels of a weekend full of speculation that the acquisition was in progress, but both companies had been tightlipped about the possibility. Skype officials could not immediately be reached for comment.

Skype's software lets people talk for free over the Internet using computers and microphones. Calls to landline telephones are also possible at costs that, along with other low-cost Voice over Internet Protocol providers, are creating upheaval in the telecommunications industry.

While some analysts had been skeptical about eBay's needs for a VoIP provider, the company said Skype would "strengthen eBay's global marketplace and payments platform, while opening several new lines of business."

"Communications is at the heart of e-commerce and community," eBay chief executive Meg Whitman said in a statement. "By combining the two leading e-commerce franchise,

eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net."

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