Billion dollar chat

Internet trading portal

is to acquire Luxembourg-based

for approximately $2.6 billion in up-front cash and eBay stock, plus a potential performance-based consideration.

Founded in 2002 by Niklas Zennström and Janus Friis, Skype offers voice communications to anyone with an Internet connection anywhere in the world. The Skype software is easy to download and install, and enables free calls between Skype users online. Skype’s premium services also provide connectivity to traditional fixed and mobile telephones.

Skype’s software also offers voicemail, instant messaging, call forwarding and conference calling. Upcoming product releases include Skype video, expressive content such as avatars, and customised toolbars for Outlook and Internet Explorer.

One of the fastest growing companies on the Internet, Skype already has 54 million members in 225 countries and territories. And the company is currently adding approximately 150,000 users a day. In North America alone, Skype claims to have more users and serve more voice minutes than any other Internet voice communications provider.

eBay plans to use the Skype software to allow its buyers to talk to sellers quickly, as well as to allow sellers to build relationships with customers and close sales. As a result, eBay believes that Skype will increase trade on its site, especially in categories that require more involved communications such as used cars, business and industrial equipment and high-end collectibles. eBay’s other shopping websites - Shopping.com, Rent.com, Marktplaats.nl and Kijiji - will also benefit.

Skype generated approximately $7 million in revenues in 2004, and the company anticipates that it will generate an estimated $60 million in revenues in 2005 and more than $200 million in 2006.

The acquisition is subject to various closing conditions and is expected to close in the fourth quarter of 2005.