Microsoft Corp. has agreed to acquire the popular Internet telephone service Skype SA for $8.5 billion in the biggest deal in the software maker’s 36-year history. The all cash deal would give the software giant a leading communications brand to partner with its other products such as Outlook, Lync, and Xbox LIVE.
Microsoft Corp. has agreed to acquire the popular Internet telephone service Skype SA for $8.5 billion in the biggest deal in the software maker’s 36-year history. The all cash deal would give the software giant a leading communications brand to partner with its other products such as Outlook, Lync, and Xbox LIVE.
Microsoft will acquire Luxembourg-based Skype, with 170 million active users, from an investor group led by Silver Lake, the companies said in a statement. The agreement was approved by the boards of directors of both companies
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Mint reports, buying money-losing Skype would have no immediate impact on Microsoft’s finances, but would make clear its intention to compete with rivals such as Apple Inc and Google Inc .
According to media reports, Microsoft would be Skype’s second large-company owner. EBay bought Skype for $2.6 billion in 2005, but its attempt to unite the phone service with its online shopping bazaar never worked out. It wound up selling a 70 percent stake in Skype to a group of investors led by private equity firms Silver Lake and Andreessen Horowitz for $2 billion 18 months ago.
Besides eBay, Silver Lake and Andreessen Horowitz, Skype’s other major shareholders are Joltid Limited and Canada Pension Plan Investment Board.
According to AmLaw Daily, Washington-based attorneys from Covington & Burling and Cadwalader, Wickersham & Taft are part of the global team assisting Microsoft Corporation in its $8.5 billion purchase of Skype Global.
Covington’s 13-lawyer team included Washington-based Partner Yaron Dori and Associates Elizabeth Canter and Paula Domingos. Attorneys from the firm’s San Francisco, Brussels and London offices are also working on the deal. Cadwalader Partners Charles “Rick” Rule and Jonathan Kanter are serving as antitrust counsel to Microsoft.
Simpson Thacher’s team for the Skype deal is led by corporate Partners Charles “Casey” Cogut and Alan Klein, as well as compensation and benefits Partner Gregory Grogan.
Sullivan & Cromwell team is advising both Skype Global and Silver Lake on the Microsoft deal. The corporate team was led by London Partner Richard Morrissey, Los Angeles Partner Alison Ressler and Palo Alto Partner Sarah Payne.
Skadden, Arps, Slate, Meagher & Flom is counsel to Skype founders Niklas Zennström and Janus Friis, as well as to their company Joltid Limited, which is also a Skype shareholder. M&A Partners Michael Gisser and Rick Madden are part of Skadden’s team.
ET reports, post acquisition, Skype would become a new business division within Microsoft, and Skype CEO Tony Bates would become President of Microsoft Skype Division, reporting directly to Microsoft CEO Steve Ballmer.
Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms, the release added.
The acquisition is subject to regulatory approvals and other customary closing conditions. The parties hope to obtain all required regulatory clearances during the course of this calendar year.
Last year, Skype reported revenue of USD 860 million on which it posted an overall loss of USD 7 million, and a long-term debt of USD 686 million.
Microsoft’s biggest acquisition until now had been its 2007 buy of digital marketing firm aQuantive for $6.3 billion. Microsoft unsuccessfully tried to buy Yahoo! in 2008 for $47.5 billion in another bid to make an online splash.