This post was written by DailyFinance contributor Sam Gustin.

Memo to would-be Silicon Valley moguls: do not double-cross a pair of highly litigious billionaires.

After weeks of back-and-forth legal jousting, the tech heavyweights fighting over Skype are set to announce a deal in which the founders of the popular Web-calling service would regain a stake in the company they sold to eBay (NASDAQ: EBAY) in 2005 for $2.6 billion, according to Bloomberg. Nice trick.

The pact ends an at-times vicious soap opera replete with accusations of back-stabbing, dishonesty, and outright theft against Mike Volpi, the pair's one-time Golden Boy, who they believe double-crossed them. The legal circus held up eBay's proposed $2 billion sale of Skype to a consortium of private investors led by Silver Lake Partners and Andreessen Horowitz, the investment firm of Marc Andreessen, the billionaire co-founder of Netscape.

The question that I haven't seen answered in any of the articles relating to the partial acquisition of Skype from eBay (NASDAQ: EBAY) by a team of private investors is, who will own the underlying IP that runs the Skype P2P communications network?

That question must somehow have been answered if savvy investors such as Silver Lake Partners and Netscape founder Marc Andreesen's investment fund, felt comfortable forking over $1.9 billion to eBay.

And as TechCrunch's Mike Arrington points out, eBay did okay on this deal, emerging with a paper gain and still some share of any potential upside.

eBay Inc. (NASDAQ: EBAY) announced Tuesday that it has reached an agreement to sell most of its stake in Skype in a deal that values the online telecommunications service at $2.75 billion. eBay will get $1.9 billion in cash and a $125 million note from the buyer.

An investment group led by the private-equity firm Silver Lake, including Index Ventures, Andreessen Horowitz, and the Canada Pension Plan Investment Board, will buy the 65% stake in the company. eBay, which will retain a 35% stake, expects the deal to close in the fourth quarter of this year.

While eBay (NASDAQ: EBAY) said earlier this year that it was planning to spin off Skype in an initial public offering in 2010, it is now being reported that eBay is looking for a buyer willing to pay $2 billion or more for the internet telephone service provider.

Those interested in a buyout may include Andreesen Horowitz and Index Ventures, which were early investors in Skype before its eBay acquisition in 2005. A group of well-known venture capital and large private equity firms are pooling resources to join the bid, according to a source close to the deal.

Has eBay Inc. stumbled with another acquisition? TechCrunch is reporting that the online auction giant has hired Deutsche Bank to shop StumbleUpon, the Web site recommendation service it acquired in 2007 for $75 million.

StumbleUpon helps users discover Web sites based on their interests. It tries to take the place of a traditional search engine by limiting the number of search results, making money by embedding sponsor sites in those results. Interestingly enough, there's no indication on the site that StumbleUpon is actually an eBay company.

Perhaps eBay had some grand plans for StumbleUpon that it never got around to implementing, though we were critical of eBay for not disclosing its intentions back when it made the acquisition. There was some talk that the service could be integrated into eBay's Skype phone service, but with that property under-performing and reportedly up for sale, eBay may no longer have a need for it.

Continue reading at TechConfidential.com.

Though tech M&A has been fairly quiet of late because of macro-economic conditions, the rumor mill is churning strong, with Google Inc. (NASDAQ: GOOG) in the middle of two rumored deals.

Shares of online travel site Expedia Inc. (NASDAQ: EXPE) were up more than 2% Wednesday on top of Tuesday's 10% gain on rumors of a potential buyout by Google. Meanwhile, TechCrunch is reviving a rumor from last year that eBay Inc. (NASDAQ: EBAY) is in talks to either sell Skype to Google or the two sides would form a partnership involving the Internet phone service provider.

When we last wrote about a possible Google buy of Skype in November, we didn't think anything was imminent. After all, eBay would have been selling at a low point, having just announced the unit was underperforming. At that time, Skype's quarterly revenues were $98 million. In its last earnings report, Skype's revenues were reported at $115 million, a 76% increase versus the prior year and a 17% increase quarter-over-quarter. So it's not like Skype is a total disaster.

Continue reading at TechConfidential.com.

With revenue growth of 35%, PayPal was one of the stars of eBay Inc.'s (NASDAQ: EBAY) fourth-quarter earnings last week. On Monday, the online auctioneer said its Internet payment subsidiary would acquire Fraud Sciences Corp., a privately held Israeli company with expertise in online risk tools, for $169 million in cash.

We'd link to the Fraud Sciences Web site, but it's already been hijacked by eBay.

Continue reading at TechConfidential.com.

PayPal was arguably eBay, Inc.'s (NASDAQ: EBAY) best acquisition. The leading internet payment processing and transaction service continues to rack up revenue for the auction giant on its worldwide auction sites. In addition to that, PayPal has become a sort of de-facto payment and money transfer service on the internet, regardless of being owned by eBay. If you need to buy something from an internet merchant or vendor, many now take PayPal payments in addition to credit cards. With over 150 million accounts active the world over, that's market penetration for you.

Could PayPal be a main reason why eBay acquisition rumors may start swirling around the internet in 2008 -- again? Known suitors have included Yahoo!, Inc. (NASDAQ: YHOO) and Amazon.com (NASDAQ: AMZN). EBay seems to be mostly immune from any economic downturn, and in fact may actually pick up more traffic as bargain hunters tighten their wallets and purses in a world of high energy prices and mortgage credit problems. Well, at least in the U.S., anyway.

Although Google Checkout and Amazon's stake in Bill Me Later are two alternatives to eBay's PayPal, first-mover advantage is squarely in PayPal's favor. It's hard -- even with Google's prowess -- to imagine any service rivaling PayPal any time soon. But the popularity of the service may serve to be a central piece in an eBay acquisition should a bidding war develop. That $1.5 billion eBay paid for PayPal back in 2002 may look like a bargain if any outfit ever looks to take over the world's largest auction franchise.

The new year is little more than a week away, and with it will come a new round of speculation over an internet industry mega-merger. As 2007 ends we've seen one pundit argue why a deal linking Amazon.com Inc. (NASDAQ: AMZN) and eBay Inc. (NASDAQ: EBAY) would makes sense, and another imploring a private equity firm to buy Yahoo! Inc. (NASDAQ: YHOO). Of the two, a Yahoo! buyout seems more likely, but both remain long-shots.

An eBay-Amazon hook-up is easier to discount. Simply put, neither really would be interested in the other. Amazon has a lot of momentum and is unlikely to want to join its fate to a company that doesn't. Amazon has mostly stayed away from acquisitions, preferring partnerships to outright buys. Buying Yahoo! would represent not only a real roll of the dice for a company unaccustomed to major corporate integrations.

Continue reading at TechConfidential.com.

Traditionally, private equity firms have focused on mainstream businesses. But, we are seeing more and more deals in the tech sector. In fact, Google Inc. (NASDAQ: GOOG)'s buyout of DoubleClick was a sign that private equity can make a mint from tech.

According to a piece in The Wall Street Journal [a paid service], there's another important deal. That is, Providence Equity Partners has purchased a majority stake in NexTag for roughly $830 million.

Basically, NexTag is a comparison shopping site. And, yes, the space has been full of M&A deals over the past couple years -- such as Shopzilla, eBay Inc. (NASDAQ: EBAY)'s Shopping.com and so on.

Because NexTag is privately held, it's tough to gauge the revenues, but the rumor is that the figure is in the $200 million range. Thus, it looks like Providence is paying a hefty premium (at least by private equity standards).

My hunch is that this is a late-stage funding prior to an IPO or perhaps a sale to a major strategic player. But, this has historically been the role of VCs, not private equity firms. Yet with gazillions of dollars in the private equity space, we're probably going to see more unconventional deals.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.