Mergers, Acquisitions and Takeovers Case Study

eBay: Rethinking Skype

OR

Abstract:
eBay, the online auction giant as part of its expansion strategy, acquired Skype; a popular communication platform for $2.6 billion. eBay’s CEO Meg Whitman had expected the acquisition to enhance their business. However eBay found itself facing a phase of diminishing returns and had to write down Skype by $900 million. The case explores the rationale behind eBay’s purchase of Skype. It also analyses why the synergies of the deal did not materialize as expected. The case study highlights the unrealised synergies of the acquisition.

Pedagogical Objectives:

• To comprehend the dynamics of online business
• To grasp the concept of unrelated product diversification
• To analyse how an integration strategy is vital for online businesses.

Keywords : eBay; Skype; PayPal; Mergers,Acquisitions,Alliances Case Studies; Unrelated product diversification; Positioning; Internet based businesses; Acquisition; Integration; Synergies; Online Business

Contents : 
eBay’s Skype Acquisition: Unrealised Synergies
Skype’s Services
Meg Whitman’s Integration Strategy
Diminishing Returns
Performance of Skype - 2006-2007
Comparison of Skype With Competitors