Skype’s Been On the Block For Nine Months. That Means It’s Time to Leak

Two can play the game of press leaks. If you read between the lines of yesterday’s reports on eBay’s potential divestitures of Skype, it appears both sides of the deal might be using the media to influence pricing.

Before I get into it, I want to mention that a private equity investor told me his firm first received the Skype pitch around nine months ago. The inquiry was led by Mark Dyne of Europlay Capital Advisors. You may remember that name from Skype’s initial sale to eBay—Dyne was a member of Skype’s board (he didn’t return calls for comment). My source’s firm passed on the deal because Skype isn’t profitable, he said. The company’s profitability has been debated, but it had $550 million in revenues last year, according to its annual report.

So, The New York Times broke the news, reporting that Skype’s founders had been talking with private equity backers to help them buy the company back from eBay. The crucial pricing details are:

But one person with knowledge of their discussions said they were trying to raise about $1 billion in equity from private investors, and were discussing one case in which eBay itself would put up the rest of the financing in the form of a seller’s note to complete a deal worth more than $2 billion.

Buy Skype for $2 billion? I’m sure those private equity investors were none too pleased with that figure popping up in the news. Now anything lower will look like they’re ripping off the seller and its public shareholders. eBay values the company at $1.7 billion, after taking a huge writedown from its $2.6 billion purchase price. Skype had $550 million in revenues in 2008, and it’s still figuring out how to make money while competitors like Google Voice offer a similar service. Either way, the deal would require an investor with a venture-like eye, according to industry insiders. Venture investors don’t buy companies for $1.7 billion. Right now, even private equity investors aren’t doing that. Which leads us to our follow-up report.

Peter Lattman from The Wall Street Journal brings us the other side of the story. Late yesterday he reported, via Deal Journal, that KKR, Elevation Partners, Providence Equity, and Warburg Pincus had formed a consortium for the potential deal. Here’s how you know the leak for this story came from the other side:

The founders’ offer fell on deaf ears, as it was well below the price at which Ebay was willing to sell the business. The two sides are far apart and at this stage a deal involving the private-equity firms is unlikely to be completed, said people familiar with the matter.

It almost reads like a threat: “Take a lower price, eBay, or the buy side will pull its offer altogether.” Then we get the follow-up from The Daily Deal: Skype Deal Seems Unlikely.” It may as well say “Serves you right for fighting fire with fire.”