UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 11, 2005
eBay Inc.
(Exact name of registrant as specified in its charter)
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| Delaware
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000-24821
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77-0430924 |
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.) |
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| 2145 Hamilton Avenue, San Jose, California
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95125 |
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| (Address of principal executive offices)
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(Zip Code) |
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| Registrant’s telephone
number, including area code: (408) 376-7400
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Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On September 11, 2005, eBay Inc. (“eBay”), Skype Technologies S.A., a limited company (société
anonyme) registered under the laws of the Grand Duchy of Luxembourg (“Skype”), and the shareholders
and warrant holders of Skype (collectively, the “Sellers”) entered into a Sale and Purchase
Agreement under which eBay has agreed to acquire all of the outstanding share capital of Skype (the
“Purchase Agreement”) for an initial payment consisting of
approximately € 2.1 billion, or approximately $2.6 billion, which is
comprised of approximately $1.3 billion in cash and the value of approximately 32.4
million
shares of eBay common stock, plus potential earn out payments tied to the achievement of certain
performance targets prior to June 30, 2009. All dollar amounts herein are based on the
Euro-Dollar exchange rate as of September 9, 2005.
The
maximum amount potentially payable under the performance-based
earn-out is approximately €1.2 billion, or approximately $1.5
billion, and would be payable in cash or eBay stock, at eBay’s
discretion, with expected payment dates in 2008 and/or 2009. Skype
shareholders were offered the choice between several consideration
options for their shares. Shareholders representing approximately 40%
of the Skype shares chose to receive a single payment in cash and
eBay stock at the close of the transaction (the “Fixed
Consideration Election”). Shareholders representing the
remaining 60% of the Skype shares chose to receive a reduced up-front
payment in cash and eBay stock at the close plus potential future
earn-out payments which are based on performance-based targets for
active users, gross profit and revenue (the “Earn Out
Election”).
The terms and conditions of the earn out payments are set forth in an Earn Out Agreement entered
into concurrently with the Purchase Agreement by eBay, Skype and the Sellers who elected to receive
the earn out payments. The earn out payments are contingent upon Skype achieving: (a) a net revenue
and gross margin-based target; (b) a gross profit-based target;
and (c) a target based on
the number of active users of Skype’s communication products. Base earn out payments of up to an
aggregate of approximately €900 million, or approximately
$1.1 billion, weighted equally among the three
targets, would be payable if the
targets are achieved over any four-quarter period commencing on January 1, 2006 through June 30,
2009. Additional bonus earn out payments of up to an aggregate of
approximately €300 million, or approximately $400 million, weighted equally
among the three targets, would be payable if Skype exceeds the
targets during calendar year
2008.
The eBay
stock to be issued in connection with the acquisition will be issued
in reliance on certain exemptions from registration available under
applicable securities law. Seventy-five percent of the shares of eBay
stock to be issued to Sellers who made the Fixed Consideration
Election that are not otherwise deposited into escrow will be
subject to contractual restrictions on transfer that will lapse with
respect to one-third of such shares on each of the 180th, 360th and
540th day following the closing of the acquisition. All of the shares
of eBay stock to be issued to Sellers who made the Earn Out Election that are included in the up-front payment but are not otherwise deposited into escrow will be subject to
contractual restrictions on transfer that will lapse with respect to
twenty-five percent of such shares on each of the 180th, 360th, 540th
and 720th day following the closing of the acquisition. eBay and the
Sellers have entered into a Registration Rights Agreement requiring
eBay to file a registration statement on Form S-3 covering the resale
of such eBay stock within 75 days following the closing of the
acquisition.
The closing of the acquisition is conditioned upon customary closing conditions, as well as the
execution of an option assumption agreement by holders representing at least 85% of the outstanding
Skype stock options, as well as 85% of the holders thereof, whereby
each unexercised Skype option would be
assumed by eBay and converted into an option to acquire eBay common stock.
The foregoing description of the Purchase Agreement, the Earn Out Agreement and the Registration
Rights Agreement do not purport to be complete and is qualified in its entirety by reference to
such agreements which are filed as Exhibits 2.1, 2.2 and 10.1, respectively, hereto and are
incorporated herein by reference. The press release announcing the acquisition, dated September 12,
2005, is filed as Exhibit 99.1 hereto.
Item 9.01
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| EXHIBIT NO. |
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DESCRIPTION |
2.1
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Sale and Purchase Agreement dated as of September 11, 2005,
by and among eBay Inc., Skype Technologies S.A. and the
parties identified on Schedule 1 thereto. |
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2.2
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Earn Out Agreement dated as of September 11, 2005, by and
among eBay Inc., Skype Technologies S.A. and the parties
identified on Schedule I thereto. |
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10.1
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Registration Rights Agreement dated as of September 11,
2005, by and among eBay Inc. and the parties identified on
Schedule I thereto. |
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99.1
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Press Release dated September 12, 2005. |