EBay said yesterday that it would buy Skype Technologies, the Internet phone provider based in Luxembourg, for $2.6 billion in cash and stock, a move that eBay hopes will bolster trading on its online auction site.
The total value of the deal may grow based on "potential performance-based consideration" that could be worth an additional $1.5 billion, eBay said. Though Skype’s revenue is expected to grow to about $200 million in 2006, from an estimated $60 million this year, eBay does not expect Skype – which gives its basic PC-to-PC service away free – to turn a profit until the fourth quarter next year.
The deal ends months of speculation about who might scoop up Skype, which since 2002 has been offering downloadable software that allows users to talk to one another over the Internet through their personal computers. The News Corporation, Google and Yahoo had been mentioned as potential suitors in recent months.
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