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November 5, 2009

eBay, Silver Lake settle Skype litigation with Joltid

eBay plans to focus on core eCommerce and payments businesses

By CBR Staff Writer

eBay said that the investor group led by Silver Lake, which had previously entered into a definitive agreement to acquire a majority stake in Skype from the company, has reached a settlement agreement with Joltid and Joost that gives Skype ownership over all software previously licensed from Joltid and ends all litigation currently pending against the investor group and eBay at the closing of the acquisition.

John Donahoe, president and CEO of eBay, said: “Skype will be well positioned to move forward under new owners with ownership and control over its core technology. At the same time, eBay continues to retain a significant stake in Skype and will benefit from its continued growth. We look forward to closing the deal and focusing on growing our core ecommerce and payments businesses.”

As part of the settlement agreement, Joltid and Skype founders Niklas Zennstrom and Janus Friis will join the investor group, contributing Joltid software and making a capital investment in exchange for a 14% stake in Skype.

Reportedly, Silver Lake and other investors including Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB) will together hold 56% of Skype and eBay will retain 30%.

eBay will receive approximately $1.9 billion in cash upon the completion of the sale and a note from the buyer in the principal amount of $125m.

Egon Durban, managing director of Silver Lake, said: We are very pleased to have the litigation resolved. We remain confident in a great future for Skype, and we look forward to working with Niklas, Janus and the other investors as partners to help the company achieve its full potential.

The deal, which values Skype at $2.75 billion and is not subject to a financing condition, is expected to close in the fourth quarter of 2009.

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