BoomTown Will Have What Marc Andreessen Is Having–Investors' Splashy Win in Microsoft-Skype Hookup
When a group of powerful investors, including Silver Lake Partners and Andreessen Horowitz, waded into the mess at Skype less than two years ago with a $1.9 billion cash investment for a big chunk of the company, it was–how can BoomTown put this delicately–a hot mess.
With lawsuits flying over intellectual property violations, turmoil in the relationship with its eBay owners and increasing competitive pressures, you get the mess part.
But there was also the hot, because of so much potential in the fast-growing Internet telephony and video communications company.
Hotter today, it seems.
Microsoft–in what would be its most aggressive acquisition by the software giant in the digital space–is poised to announce that it will buy Skype, forking over $8.5 billion all in, which includes the assumption of the Luxembourg-based company’s debt.
Sources said that the splashy deal is now done and will be announced early this morning to much fanfare.
That is a far cry from 2009.
In fact, at the time that his newly hatched venture firm made its biggest deal yet, Silicon Valley legend Marc Andreessen was all sunshine and ponies about the just-settled tense legal situation.
But, as Andreessen told BoomTown in a phone interview about the aggressive legal tactics of Niklas Zennström and Janus Friis that resulted in them finally seizing a stake in the Internet telephony giant by suing him and many other Silicon Valley players:
“We did not take it personally. It’s a clean sheet of paper.”
Well, it is actually a torn, stained and very worn out piece of paper, due to all the various machinations, but bygones!
Andreessen–who knows a thing or two about legal tussles, if you recall Netscape-Microsoft–said the real point is that it is time to focus on the business of Skype rather than fighting over who controls Skype.
“It’s really good to have everyone lined up and rowing in the same direction. We have to capitalize on the opportunity, because Skype is poised for a new wave of growth,” said Andreessen. “They have an amazing head of steam, because the logical way for voice and video communications to be conducted will be over the Web.”
It turns out he was right, given the haul that Andreesen Horowitz and other investors will be getting now.
The price tag essentially tripled the $2.75 billion valuation then. In fact, a year before, eBay had actually written down the value of Skype to $1.9 billion.
That means for its $65 million–it was reported then the Andresseen Horowitz stake was $50 million, but it was more–it will nail nearly $200 million.
That could be much more depending on what percentage of the deal the VC firm actually got.
Andreessen Horowitz’s stake is joined with Silver Lake, as well as the Canada Pension Plan Investment Board.
In total, they own about 56 percent of Skype, worth about $4.5 billion.
Another 30 percent is owned by eBay, which seems to have done a little better than even-steven for all its trouble with Skype.
It will get $2.4 billion now, having paid out about $3 billion back in 2005 for Skype. It got the $1.9 billion in the latest investor deal in 2009.
The big winners are Zennström and Friis, who keep on selling the same company to corporate moneybags over and over, while also suing anyone who looks at them crossways.
The Skype co-founders–who started out as Internet scofflaws with their Kazaa music-stealing service–had a 14 percent share, giving them $1.1 billion.
Like I said–not that I actually invest in any of these tech companies I cover–I’ll have what the lawsuit twins and Andreessen are having.
Back in 2009, in fact, he laid it out with regards to Skype pretty presciently.
“One of our investing mottos is that we invest in strength, not lack of weakness,” he said. “The question is how big is the opportunity.”
Big, apparently, now that Microsoft is footing the bill.