In November 2009 eBay Inc. announced that an investor group led by a private equity firm, Silver Lake, acquired a majority stake in Skype. Skype’s Estonian founders, Niklas Zennstrom and Janus Friis, retained a 14% stake, Silver Lake, investors including Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB), held 56%, while eBay retained 30%. The deal valued Skype at $2.75 billion.
A year and a half later in April 2011, Skype’s regulatory filing put the value of the company at about $5.1 billion dollars. A month later Microsoft bought the company for $8.5 billion. There have been debates over whether or not Steve Ballmer overpaid.
A simple numerical calculation shows that he did not. The “premium” Microsoft paid to Skype’s owners was roughly what they would have paid to the U.S. government if Microsoft repatriated its money held overseas. If Microsoft returned $8.5 billion to the U.S., it would have paid the 35% corporate tax, roughly $3 billion. Thus, as far as Microsoft is concerned, its “net” payment for Skype amounted to $5.5 billion.
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