Skype Said to Have Demanded Over $7 Billion in Talks

Skype Technologies SA’s owners refused to entertain offers of less than $7 billion, the value they expected the startup to get from a planned initial public offering, before agreeing to a buyout from Microsoft.

“Microsoft really wanted this,” said Matt McCormick, a money manager for Cincinnati-based Bahl & Gaynor Inc., which oversees $3.6 billion, including Microsoft shares. “Microsoft right now is trying to do things to keep up with other faster-growing technology companies.” Microsoft Chief Executive Officer Steve Ballmer is making Microsoft’s largest acquisition on a wager he can use Internet calling to play catch-up in online and mobile advertising. He offered more than $7 billion to cover Skype’s debt and keep a rival from gaining a business that would add calling features to games, e-mail and software on computers and handsets. While Google expressed interest, neither it nor other bidders made formal offers. “It looks like an intelligent move,” said Mike Holland, chairman of Holland & Co. in New York, where he oversees assets of more than $4 billion, including Microsoft shares. “They have the mother lode of cash sitting there. They've been smart in not going crazy” with the price, he said.