ACQUIRER: Microsoft Corporation
Founded in 1975, Microsoft (Nasdaq MSFT) is the worldwide leader in software, services,
devices and solutions that help people and businesses realize their full potential.
It is the leading platform and productivity company for the mobile-first, cloud-first world,
and its mission is to empower every person and every organization on the planet to achieve
more.
Microsoft segments include Cloud and Enterprise Engineering Group, Office Product
Group, Windows and Devices Group and Technology and Research.
Microsoft has a long-standing focus and investment in real-time communications across
its various platforms, including Lync (which saw 30 percent revenue growth in Q3),
Outlook, Messenger, Hotmail and Xbox LIVE.
ACQUIREE: Skype Global
Skype Global S. r.l. ("Skype"), a leading global provider of software applications and
related Internet communications products based in Luxembourg.
Skype is communications software whose purpose is to break down barriers to
communication. With an Internet-connected device, families, friends and colleagues can
get together for free with messaging, voice and video. At low cost, they can also call
landlines or mobiles virtually anywhere in the world. Skype has recently introduced group
video, allowing groups of more than two people to do things together whenever theyre
apart.
Founded in 2003, Skype was acquired by eBay in September 2005, and then acquired by
an investment group led by Silver Lake in November 2009. Skype has made impressive
progress over the past 18 months under Silver Lakes leadership, increasing monthly calling
minutes by 150 percent, developing new revenue streams and strategic partnerships,
acquiring the intellectual property powering its peer-to-peer network, and recruiting an
outstanding senior management team.
With 170 million connected users and over 207 billion minutes of voice and video
conversations in 2010, Skype has been a pioneer in creating rich, meaningful connections
among friends, families and business colleagues globally.
ACQUISITION DATE: October 13, 2011
AMOUNT PAID: $8.6 billion, primarily in cash
TYPE OF ACQUISITION:Stock Acquisition, 100%
Microsoft Corporation acquired all of the issued and outstanding
shares of Skype Global S. r.l. ("Skype").
OTHER INFORMATION:
The major classes of assets and liabilities to which the Microsoft allocated the purchase
price were goodwill of $7.1 billion, identifiable intangible assets of $1.6 billion, and
unearned revenue of $222 million.
The goodwill recognized in connection with the acquisition is primarily attributable to our
expectation of extending Skype's brand and the reach of its networked platform, while
enhancing Microsoft's existing portfolio of real-time communications products and
services.
Microsoft assigned the goodwill to the following segments:
SEGMENTS AMOUNT
Entertainment and Devices Division $4.2 billion
Microsoft Business Division $2.8 billion
Online Services Division $54 million
Following are the details of the purchase price allocated to the intangible assets acquired:
SEGMENTS (In millions) AMOUNT
Marketing-related (trade names) $1, 249
Technology-based $275
Customer-based $114
Contract-based $10
TOTAL $1, 648
REASONS FOR THE BUSINESS COMBINATION
1. To support Microsofts devices
Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array
of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live
and other communities. Microsoft will continue to invest in and support Skype clients on
non-Microsoft platforms.
2. To improve communication
Skype is a phenomenal service that is loved by millions of people around the world, said
Microsoft CEO Steve Ballmer. Together we will create the future of real-time
communications so people can easily stay connected to family, friends, clients and
colleagues anywhere in the world.
3. To extend Global Community
Microsoft and Skype share the vision of bringing software innovation and products to our
customers, said Tony Bates. Together, we will be able to accelerate Skypes plans to
extend our global community and introduce new ways for everyone to communicate and
collaborate, Bates said.
4. To enhance existing portfolio
The combination will extend Skypes world-class brand and the reach of its networked
platform, while enhancing Microsofts existing portfolio of real-time communications
products and services.
