Skype is finally free — eBay settles with Skype co-founders, clearing way for buyout

EBay has settled with the founders of Skype, clearing up some nasty lawsuits that now allows the Internet phone company to be sold to a consortium of investors that also includes the Skype co-founders.
Private equity firm Silver Lake Partners leads the investor group, and is joined by venture capital firm Andreessen Horowitz and the Canada Pension Plan Investment Board, as well as Skype founders Niklas Zennström and Janus Friis.
As part of the deal, Index Ventures, a very early original investor Skype, is being jettisoned from the investor syndicate. Very bad blood had developed between Mike Volpi, a partner at Index Ventures, and the Skype founders after it emerged that he’d try to go behind their back to arrange the deal without including them (not great diplomacy, because he was working for the co-founders at the time, as chief executive of video company Joost). Separately, Friis and Zennström had accused eBay of breaching a licensing deal concerning the Joltid technology, and had sued the entire investor consortium.
Marc Andreessen, partner of Andreessen Horowitz, confirmed the deal with VentureBeat this morning: “Everything is settled,” he said. All of the intellectual property disputes — a long saga that centered around the core peer-to-peer technology underneath Skype, owned by Joltid — have also been cleaned up, he said. Joltid has been transferred to Skype, he said.
Andreessen said the company is now free to build for the future, and he predicted Skype will become a tremendous company — and he citied significant unrealized potential. One is the exploding smartphone market, where an increasing number of smartphones now have the ability to run Skype. Another is creating a robust set of enterprise offerings: Businesses are using Skype, but almost entirely on an ad hoc basis. Skype can do a lot more to help businesses integrate itself into their current technology infrastructure, he said.
Under the terms, the Skype co-founders get 14 percent of Skype, partly in exchange for capital, but also as credit for their transfer of the rights to Joltid, an entity the co-founders controlled. Friis and Zennström also get a board seat at the new Skype.
The rest of the investor group (Silver Lake, the Canadian pension, and Andreessen Horowitz) together will get 56 percent of Skype. eBay will own 30 percent. The deal values the whole company at $2.75 billion. EBay is expected to get about $1.9 billion in cash as well as a $125 million note.
The deal is expected to close by the end of the year.
Andreessen said had been two possibilities to the legal tussling. One: continued, really messy litigation (indeed, the failure of Joost had led to lots of acrimony, and we’ve heard there were many facts that hadn’t even leaked yet, as if the court documents hadn’t revealed enough of the ugliness). Or two: Clearing things up, and letting the company realize its upside.