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Microsoft used "No-Shop" clause to keep Skype from seeking a better deal

Posted: , by Alan F.

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Unnamed sources close to the Microsoft-Skype deal told Bloomberg that while negotiating the final $8.5 billion price tag for Skype, the Redmond based tech giant told Skype's investment bankers that the company would not enter into negotiations without a "No-Shop" clause as part of the deal. The clause prevented Skype's bankers from using the Microsoft $8.5 billion bid as a stalking horse to find a higher price from another company.

You would think that Microsoft really had nothing to worry about as not too many companies have a pile of cash rich enough to make such an offer. Skype said that no other company was willing to make a serious bid for at least the $7 billion that the internet phone company was expecting to receive from an IPO. That was the minimum price that Skype was willing to accept. Google was rumored to have been interested in Skype, but was willing to pay no more than $4 billion. Both Microsoft and Skype agreed to the final price in mid-April.

Closing the deal just one month after first approaching Skype, Microsoft is expected to put Skype's VoIP technology on Windows Phone 7 devices, possibly making a last minute rush to include it on the upcoming Mango upgrade. Money Manager Maytt McCormick of Bahl and Gaynor, a firm that runs $3.6 billion and owns Microsoft stock, said, "Microsoft really wanted this. Microsoft right now is trying to do things to keep up with other faster- growing technology companies."

source: Bloomberg

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posted on 10 May 2011, 22:48

1. messiah (Posts: 433; Member since: 19 Feb 2010)


Bloomberg from Office Space?

did u get the memo about the tps reports?

posted on 10 May 2011, 22:59 3

2. Lucas777 (Posts: 2137; Member since: 06 Jan 2011)


this is gonna be so cool or wp7... and what are we gonna call wp7 when mango comes out?

posted on 10 May 2011, 23:55

3. JeffdaBeat (unregistered)


My thing is, how long is Skype going to be relevant? I mean, isn't the industry pretty much moving to VoIP anyway? How long will it be before the carriers shut out Skype to again make up for lost revenue for people using voice minutes anymore?

posted on 11 May 2011, 04:19 2

6. Henrik (unregistered)


Here in Europe the carrier companies are no longer (or at least starting from 2012) allowed to block services like Skype in their operating networks. It's a law coming straight from the EU, so if they don't comply they are in serious trouble.

posted on 11 May 2011, 08:24

7. jbash (Posts: 342; Member since: 07 Feb 2011)


Skype will continue to be viable due to the patents it holds for voip and video chat. Why else would microsoft buy them? There is alot of underlying reasons besides just a ready made chat service for windows.

posted on 11 May 2011, 00:15

4. korbindallis (unregistered)


@messiah

hehehehe had what a laugh at work reading ur comment on "office space"

yes those tps reports u have to be standing sipping a mug of coffee when u say that

posted on 11 May 2011, 01:55 1

5. SemperFiV12 (Posts: 844; Member since: 09 Nov 2010)


Kick Ass.... Bringing out the big bucks and going all in for Windows Phone 7. Microsoft is serious!

posted on 12 May 2011, 20:55

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posted on 14 Sep 2011, 15:01

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