eBay Confirms It Is Buying Skype

After a week of not responding to rumors and speculation, eBay Inc. confirmed today it is buying Internet telephony company Skype Technologies SA.

The online auction giant will pay $2.6 billion in cash and stock, and expects to close the deal in the fourth quarter of 2005.

In a news release, eBay said owning Skype will strengthen its payments platform and open new lines of business. In essence, eBay is looking to facilitate communications among its buyers and sellers, sell pay-per-call communications, and reach countries it previously has not penetrated, such as Japan and Scandinavia. Skype has 54 million members around the world.

eBay did not respond to requests for an interview.

"By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net,” said Meg Whitman, president and CEO of eBay, in a prepared statement.

Skype was founded in 2002 by Niklas Zennstrom and Janus Friis. The acquisition terms keep Zennstrom and Friis will remain in their current positions. Zennstrom will report to Whitman and join eBay's senior executive team.