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): October 14, 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) |
Registrants telephone number, including area code: (408) 376-7400
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:
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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 2.01 Completion of Acquisition or Disposition of Assets
On October 14, 2005, eBay Inc. (eBay) completed its previously announced acquisition of the
outstanding securities of Skype Technologies S.A., a limited company (société anonyme) registered
under the laws of the Grand Duchy of Luxembourg (Skype), pursuant to the terms of the Sale and
Purchase Agreement dated September 11, 2005 (the Purchase Agreement) entered into among eBay,
Skype and the shareholders and warrantholders of Skype. Pursuant to the terms of the Purchase
Agreement, Skype will become an indirect wholly-owned subsidiary of eBay.
In exchange for the share capital and warrants of Skype, eBay made an initial payment to the
sellers of such share capital and warrants consisting of approximately 2.1 billion, or
approximately $2.6 billion, which was comprised of approximately $1.3 billion in cash and the value
of approximately 32.8 million shares of eBay common stock, plus potential earn out payments tied to
the achievement of certain performance targets prior to June 30, 2009. The maximum amount
potentially payable under the performance-based earn out is approximately 1.1 billion, or
approximately $1.3 billion, and would be payable in cash or eBay stock, at eBays discretion, with
expected payment dates in 2008 and/or 2009. All dollar amounts herein are based on the Euro-Dollar
exchange rate as of October 12, 2005, as compared with the Euro-Dollar exchange rate as of
September 9, 2005 used for purposes of calculating the amounts set forth in eBays Current Report
on Form 8-K filed on September 15, 2005 (the Original Form 8-K). In addition, since the filing
of the Original Form 8-K, certain options to acquire ordinary shares of Skype have been exercised
and the holders of the shares issuable upon exercise of the options have made either a Fixed
Consideration Election or an Earn Out Election as described below.
Skype
shareholders and warrantholders were offered the choice between
several consideration alternatives for their shares and warrants. Shareholders and warrantholders
representing approximately 42% of
the Skype shares and warrants chose to receive a single payment in
cash and eBay stock at the closing of the acquisition (the Fixed Consideration Election). Shareholders and warrantholders
representing the remaining 58% of the Skype shares and warrants chose to receive a reduced
up-front payment in cash and eBay stock at the closing of the
acquisition 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 of the share capital
and warrants of Skype 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 Skypes communication
products. Base earn out payments of up to an aggregate of
approximately
877 million, or
approximately $1.05 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
292 million, or
approximately $351 million, weighted equally among the three targets, would be payable if Skype
exceeds the targets during calendar year 2008. The Earn Out Agreement also provides that certain
persons who were officers and directors of Skype prior to the closing of the transaction will
continue to be officers and directors of Skype following the closing of the transaction.
The eBay stock to be issued in connection with the acquisition will be subject to certain
contractual and other restrictions on resale. Seventy-five percent of the shares of eBay stock to
be issued to persons 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 persons 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 of the share capital and warrants of Skype 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.
In
addition to the foregoing, eBay agreed to assume the options
to acquire ordinary shares of Skype outstanding as of the closing of the transaction (the Skype
Options) and convert them into options to acquire approximately 1.9 million shares of eBay stock (the eBay
Options) pursuant the terms of Option Assumption Agreements or EMI Rollover Agreements entered
into between eBay and the holders of options to acquire ordinary shares of Skype in connection with
the closing of the transaction.
The foregoing description of the transactions consummated pursuant to the Purchase Agreement does
not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement,
the Earn Out Agreement and the Registration Rights Agreement, which are filed as Exhibits 2.1, 2.2
and 10.1, respectively, hereto and are incorporated herein by reference, and the Option Assumption
Agreements and EMI Rollover Agreements, forms of which are filed as Exhibits 2.3 and 2.4,
respectively, hereto and are incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities
The disclosure set forth in Item 2.01 above is hereby incorporated herein by reference. The eBay
stock issued to the sellers of the share capital and warrants of Skype in connection with the
Purchase Agreement, as well as the eBay Options into which the Skype Options were converted or
exchanged pursuant to the terms of the Option Assumption Agreements or EMI Rollover Agreements,
were issued in reliance upon the exemptions from the registration requirements under the Securities
Act of 1933, as amended (the
Securities Act), pursuant to Section 4(2) thereof and Regulation D and Regulation S thereunder.
eBay relied upon representations, warranties, certifications and agreements of the sellers of the
share capital and warrants of Skype and the holders of Skype Options, including their agreement
with respect to restrictions on resale, in support of the satisfaction of the conditions contained
in Section 4(2) of the Securities Act or Regulation D or Regulation S under the Securities Act.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The financial statements required by Item 9.01(a) of Form 8-K will be filed by amendment within 71
calendar days after the date this report on Form 8-K must be filed.
(b) Pro Forma Financial Information
The pro forma financial statements required by Item 9.01(b) of Form 8-K will be filed by
amendment within 71 calendar days after the date this report on Form 8-K must be filed.
(d) Exhibits
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EXHIBIT |
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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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2.3
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Form of Option Assumption Agreement. |
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2.4
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Form of EMI Rollover Agreement. |
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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 October 14, 2005. |
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* |
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Previously filed as an exhibit to eBays Current Report on Form 8-K filed on September 15, 2005 |