eBay announced Tuesday plans to spin off its Internet phone and video-conferencing service, Skype, with an IPO in the first half of next year.
The decision comes four years after online auction giant eBay , with the plans to offer customers the ability to discuss their transactions in real-time. But over the course of the four years, eBay found its acquisition failed to provide the synergies it sought.
John Donahoe, eBay's chief executive, said in a statement:
Skype is a great stand-alone business with strong fundamentals and accelerating momentum. But it's clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential. This will give Skype the focus and resources required to continue its growth and effectively compete in online voice and video communications.
Although eBay plans to launch a Skype IPO in the first half of next year, the company noted its exact timing will be based on market conditions.
Last year, Skype generated $551 million in revenues, up 44 percent over the previous year. The number of Skype's registered users has increased to 405 million at the end of last year, up 47 percent from the previous year.
Over the past year, eBay has been weighing its options regarding Skype's fate. When the company announced Donahoe as its new CEO last spring, eBay indicated the online auction giant would take a year to evaluate the future of its online phone and video-conferencing service.
Meanwhile, reports surfaced earlier this month that Skype's founders were interested in repurchasing the company, with the aid of private equity firms KKR, Warburg Pincus, Elevation Partners, and Providence.
eBay shares rose 3.76 percent in after-hours trading on Tuesday to $14.92 a share. During the regular session, eBay closed down 1.71 percent to end the day at $14.38 a share.
Skype's founders are reportedly encountering turbulence in striking a deal with eBay to buy back the Internet phone service, despite the financial backing from a group of large private equity firms, according to The Wall Street Journal.
KKR, Warburg Pincus, Elevation Partners, and Providence are reportedly teaming up with founders Niklas Zennstrom and Janus Friis, who reportedly are interested in repurchasing their company from eBay.
But eBay and the founders' group face a wide gap on price, the Journal reported, and a deal involving the private equity firms appears unlikely.
The private equity firms are reportedly interested in kicking in $1 billion toward the total purchase price, according to the report, which noted it remained unclear on the total bid price.
Back in 2005, for $2.6 billion, asserting that it would allow customers to discuss their transactions in real-time.
eBay has since publicly stated there are few synergies between the companies and that it would be willing to sell off Skype for the right price.
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