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An $8.5 billion deal to fire up Microsoft's money-losing online services division could be announced as early as Tuesday, say persons familiar with the matter
ByDouglas MacMillan andZachary R. Mider
(Bloomberg) — Microsoft Corp., the largest software maker, is in talks to buy Skype Technologies SA to add Internet-calling tools, according to two people familiar with the matter.
A deal would value Skype at about $8.5 billion and may be announced as early as today, said one of the people, who asked not to be identified because the talks are private.
Chief Executive Officer Steve Ballmer would use Skype's services in a bid to lure Web users and narrow Google Inc.'s lead in Internet advertising. The acquisition would be Microsoft's largest, dwarfing the purchase of AQuantive for about $6 billion in 2007.
A purchase by Redmond, Washington-based Microsoft would divert Skype from a plan, announced in August, to sell $100 million of shares in an initial public offering. With 663 million global users, Luxembourg-based Skype is the world's largest provider of international calling. The company has also struggled to convert users of its free PC-to-PC phone services into paying customers, according to a March regulatory filing.
The price discussed includes net debt, one of the people said. Skype reported about $775 million in debt, along with a revolving credit line of $30 million, in a filing in April.
Ballmer is aiming to revive Microsoft's online services division, which had an operating loss of $726 million in the three months that ended in March. The company lags behind Google in Web search and related advertising.
Microsoft abandoned an unsolicited effort to buy Yahoo! Inc. for as much as $47.5 billion in 2008 and instead struck an agreement to provide search services on Yahoo's pages.
Skype's Founders
Skype was founded in 2003 by Niklas Zennstrom and Janus Friis and its investors include EBay Inc., private equity firm Silver Lake and venture capital firm Andreessen Horowitz.
Zennstrom and Friis sold the company to San Jose, California-based EBay for $2.6 billion in 2005.
Skype, which started as a way for consumers to chat for free online, is developing premium services such as group video calling and pursuing corporate accounts.
Melissa Havel, a spokeswoman for Microsoft, declined to comment. Jennifer Caukin, a spokeswoman for Skype, didn't return a request for comment. Microsoft's acquisition talks were previously reported by the Wall Street Journal.
With assistance from Edmond Lococo in Beijing, Dina Bass in Seattle and Brian Womack in San Francisco.
MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.Mider is a reporter for Bloomberg News.
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ByDouglas MacMillan andZachary R. Mider
(Bloomberg) — Microsoft Corp., the largest software maker, is in talks to buy Skype Technologies SA to add Internet-calling tools, according to two people familiar with the matter.
A deal would value Skype at about $8.5 billion and may be announced as early as today, said one of the people, who asked not to be identified because the talks are private.
Chief Executive Officer Steve Ballmer would use Skype's services in a bid to lure Web users and narrow Google Inc.'s lead in Internet advertising. The acquisition would be Microsoft's largest, dwarfing the purchase of AQuantive for about $6 billion in 2007.
A purchase by Redmond, Washington-based Microsoft would divert Skype from a plan, announced in August, to sell $100 million of shares in an initial public offering. With 663 million global users, Luxembourg-based Skype is the world's largest provider of international calling. The company has also struggled to convert users of its free PC-to-PC phone services into paying customers, according to a March regulatory filing.
The price discussed includes net debt, one of the people said. Skype reported about $775 million in debt, along with a revolving credit line of $30 million, in a filing in April.
Ballmer is aiming to revive Microsoft's online services division, which had an operating loss of $726 million in the three months that ended in March. The company lags behind Google in Web search and related advertising.
Microsoft abandoned an unsolicited effort to buy Yahoo! Inc. for as much as $47.5 billion in 2008 and instead struck an agreement to provide search services on Yahoo's pages.
Skype's Founders
Skype was founded in 2003 by Niklas Zennstrom and Janus Friis and its investors include EBay Inc., private equity firm Silver Lake and venture capital firm Andreessen Horowitz.
Zennstrom and Friis sold the company to San Jose, California-based EBay for $2.6 billion in 2005.
Skype, which started as a way for consumers to chat for free online, is developing premium services such as group video calling and pursuing corporate accounts.
Melissa Havel, a spokeswoman for Microsoft, declined to comment. Jennifer Caukin, a spokeswoman for Skype, didn't return a request for comment. Microsoft's acquisition talks were previously reported by the Wall Street Journal.
With assistance from Edmond Lococo in Beijing, Dina Bass in Seattle and Brian Womack in San Francisco.
MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.Mider is a reporter for Bloomberg News.
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