'

eBay buys Skype in US$2.6 billion deal

The e-commerce giant confirms rumors that it will be acquiring the popular IP telephony company, in a bid to extend its global marketplace and payments platform.

eBay has acquired Internet communications company Skype in a deal, worth US$2.6 billion, that marries the e-commerce and voice over Internet Protocol (VoIP) platforms.

According to a media statement released today by eBay, the acquisition will help strengthen the auction site's global presence by creating new opportunities for the company in the area of voice communications.

Rumors of the sale began last Thursday, but both companies had then declined to comment.

The merger is still subject to various closing conditions, and expected to close in the fourth quarter of 2005.

eBay President and CEO Meg Whitman hailed the acquisition as a coming-together of "an unparalleled ecommerce and communications engine for buyers and sellers around the world".

"By combining the two leading e-commerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net," she said in the media statement.

By integrating Sype's communications capability into the eBay marketplace, buyers and sellers will be able to talk to each other, get the information they need and establish relationships to close a sales transaction, stated the release.

The merger would also allow for new lines of business where e-commerce communications, for example, could be monetized on a pay-per-call basis through Skype. Or a PayPal e-wallet could be used to purchase Skype fee-based services, according to eBay.

Skype's CEO Niklas Zennstrom and senior vice president of strategy Janus Friis, will remain in their current positions. Both are also the company's founders. Zennstrom will join eBay's senior executive team and report to Whitman.

Skype made headlines last week with announcements of its first tie-up with a 3G mobile partner, and a joint venture with a Chinese company to develop and market a Chinese version of Skype's VoIP software. To date, the IP telephony application has reached over 160 million downloads and there are 54 million registered Skype users in over 220 locations worldwide, according to the company.