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What type of IPO should E-Bay use to take Skype public - a traditional IPO or an online auction? E-Bay should use an online auction initial public offering (IPO) to take Skype public. In April 2009, E-Bay announced plans to separate Skype from the company. E-Bay’s main reason for selling Skype is the company allows 405 million users to make free phone calls over the internet which does not have the synergies to remain with an online payment business. This paper will argue that E-Bay an e-commerce company should use the online auction IPO procedure to take Skype public. This paper will also discuss the advantages and disadvantages of going public and how using the traditional IPO is very costly compared to online auction /Dutch IPO procedures which gives more opportunity for individuals investors.
Background
E-bay leading ecommerce company brought Skype into the corporation to become come one of the largest telecommunications company in the world. Buying Skype would allow E-Bay to soar over all the other technology giants such as Google and Microsoft Company in the telecommunication industry. E-Bay paid $2.6 million in cash and stock for Skype along with future payments that could total an additional $1.5 billion ( Kafka, 2010). E-Bay found investment group led by Silver Lake would pay $1.9 billion in cash and retain 65% interest in Skype and E-Bay would keep hold of 35% equity interest.

Initial Public Offering Advantage Going public will offer a company financial equity which may be available in amount greater than, or at cost less than the private financings. A company will be offered potentially higher valuation than is available in a private offering (Lewis & Kappes). Public offering can help the company stock gain prestige by creating a perception of stability. Another advantage of going public offers increase ability to attract...

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