EBay will add privately held Skype Technologies SA to its portfolio for roughly $2.6 billion—$1.3 billion in cash and the value of 32.4 million shares of eBay stock (subject to sales restrictions). Some Skype shareholders also can earn up to $1.5 billion in cash or stock in 2008 or 2009 based on active users, gross profit and revenue; the method of payment is up to eBay. Holders of 40 percent of the stock took a single-pay option; the remaining 60 percent went for a reduced upfront payment with “potential future earn-out payments.” The deal is expected to close in 4Q05.
It’s a heck of an upfront payout for a company that generated approximately $7 million in revenues in 2004 and estimaytes $60 million in 2005. The key number may well the projection for 2006: more than $200 million.
Press release. In case you’re counting, that could add up to more than $1 billion a year that the company, founded in 2002, has been in existance. Co-founders Niklas Zennstrom, CEO, and Janus Friis, SVP-strategy, will stay on; Zennstrom will report to eBay CEO Meg Whitman as part of eBay’s senior team.

How will Skype fit in?
-- The press release mentions a PayPal wallet associated with a Skype account making it “much easier for users to pay for Skype fee-based services, adding to the number of PayPal accounts and increasing payment volume.”
-- Skype takes eBay deeper into some countries like Japan and Sweden and can “also help streamline cross-border trading and communication.”
-- “The three services can also reinforce and accelerate the growth of one another, thereby increasing the value of the combined businesses. Working together, they can create an unparalleled engine for ecommerce and communications around the world.”
More to come.
Related: eBay To Buy Skype For $2.6 Billion: FT