8-K/AAcquisitions & DispositionsSecurities & ListingExhibits & Filings

EBAY INC 8-K/A Report, Acquisition Completed (Dec 1, 2005)

Filed December 1, 2005For Securities:EBAY

Summary

This Form 8-K/A filing from eBay Inc. serves as an amendment to a previous report, primarily providing the necessary audited financial statements and pro forma information related to its acquisition of Skype Technologies S.A. The acquisition, completed on October 14, 2005, involved an initial payment of approximately $2.6 billion, consisting of cash and eBay common stock. The deal structure included an earn-out component, where sellers could receive up to an additional $1.4 billion based on Skype's future performance through June 30, 2009. Investors should note the significant financial commitment eBay made to acquire Skype, a key player in the internet communication space at the time. The inclusion of financial statements and pro forma data offers a clearer picture of Skype's historical performance and its potential impact on eBay's financials post-acquisition. The staggered release of eBay shares issued as part of the consideration also suggests a strategy to manage potential selling pressure and align incentives with the future success of Skype within eBay.

Key Highlights

  • 1eBay Inc. completed the acquisition of Skype Technologies S.A. on October 14, 2005.
  • 2The total initial consideration for Skype was approximately $2.6 billion, composed of $1.3 billion in cash and $1.3 billion in eBay common stock.
  • 3A significant portion of Skype's sellers opted for an 'Earn Out Election,' making up to $1.4 billion in additional payments contingent on Skype's performance targets through June 30, 2009.
  • 4Performance targets for earn-out payments include net revenue, gross margin, gross profit, and active user numbers.
  • 5eBay stock issued as part of the acquisition is subject to resale restrictions, with staggered release schedules to manage market impact.
  • 6Skype options were converted into approximately 1.9 million eBay stock options.
  • 7This filing provides the audited financial statements for Skype for 2004 and 2003, and unaudited interim financials for the six months ended June 30, 2005 and 2004.

Frequently Asked Questions

This filing is an amendment to a previous 8-K. Its primary purpose is to provide the required audited financial statements of the acquired business (Skype Technologies S.A.) and the unaudited pro forma financial information reflecting the acquisition, which were not included in the original filing.

The acquisition was financed through an initial payment of approximately $2.6 billion, which consisted of approximately $1.3 billion in cash and approximately $1.3 billion worth of eBay common stock. Additionally, there's a potential for future earn-out payments totaling up to $1.4 billion based on Skype's performance.

The 'Fixed Consideration Election' meant sellers received a single payment of cash and eBay stock at closing. The 'Earn Out Election' involved sellers receiving a reduced up-front payment but gaining the potential for future earn-out payments if Skype achieved specific performance targets over a defined period.

Yes, the eBay stock issued as part of the acquisition is subject to certain contractual restrictions on resale. These restrictions will lapse in stages over periods ranging from 180 to 540 or 720 days following the acquisition's closing, depending on the election made by the sellers.