EBay to sell 65 percent of Skype for $1.9 billion

By Sinead Carew and Megan Davies

NEW YORK (Reuters) - Internet auction house EBay Inc plans to sell a majority stake in its online phone unit Skype for $1.9 billion to private investors including Silver Lake, a deal analysts said was worth more than expected but may curb eBay's growth potential.

The deal valued Skype at $2.75 billion but was well below the $3.1 billion eBay spent in acquiring Skype, and shares in eBay fell more than 2 percent after the news.

The company said the sale of a 65 percent stake allows eBay to focus on its auction service and its PayPal electronic payments service and avoid the potential risks of the initial public offering it had slated for Skype for next year.

Analysts said the sale to the investors, which included a venture firm run by Netscape co-founder Marc Andreessen, also highlighted concerns about the remainder of eBay, which faces stiff competition from rival Amazon.com Inc.

"It just returns the spotlight on the central issues eBay faces," said Atlantic Equities analyst James Cordwell, although he said the price was good for eBay.

Kaufman analyst Aaron Kessler said in a research note that selling eBay's fastest growing business would "clearly reduce the overall growth of eBay" and potentially lead investors to lower the amount they're willing to pay for eBay shares.

The group buying Skype includes London-based Index Ventures and the Canada Pension Plan Investment Board (CPPIB), along with Silver Lake and Andreessen Horowitz.

Susquehanna Financial Group analyst Marianne Wolk said the valuation was at the high end of her expectations.