Wednesday October 14, 06:37 PM
UPDATE 2-Skype founders seek to block Index, Volpi from deal
WILMINGTON (LSE: WIL.L - news) , Del., Oct 14 (Reuters) - Skype's founders have asked a U.S. federal court to prevent Index Ventures and one of its partners from further participating in the proposed $1.9 billion acquisition of the Web phone service, according to a court filing on Wednesday.
The suit, brought by Joltid and Joost, the companies of Skype founders Niklas Zennstrom and Janus Friis, said Index and one of its partners, Michelangelo Volpi, were using confidential information in their bid to acquire a majority stake in Skype from eBay Inc. Volpi was previously the Chief Executive of Joost.
Zennstrom and Friis have tried to buy back Skype and had contacted several private equity firms, according to sources.
Ebay (NASDAQ: EBAY - news) has instead agreed to sell a 65 percent stake in Skype to a consortium that includes Index, private equity firm Silver Lake, Netscape founder Marc Andreessen's Andreessen Horowitz and the Canada Pension Plan Investment Board.
Index's Volpi was a key architect of the deal. The latest complaint, in seeking the injunction, said Volpi used what he learned about Joost and Joltid's software, which is also used by Skype, to broker the deal.
'The entire transaction is, thus, infected with Volpi's misconduct,' said the filing.
It also said Volpi violated his fiduciary duties while he was CEO at Joost.
Volpi stepped down as CEO in late June. He initially stayed on as chairman, but was later removed as Joost began investigating actions taken during his tenure.
The plaintiffs said Volpi failed in his fiduciary duties by beginning negotiations for the Skype deal on behalf of Index while he was still CEO of Joost, which has struggled with a lack of popular video content.
'In early 2009, at a time when Joost was in desperate need of leadership from its chief executive, Volpi had his sights and attention focused on his next business aspiration -- to acquire Skype from eBay and become its new Chairman,' it said.
The documents also included an affidavit from Joost's chief architect, Justin Erenkrantz, saying Volpi, while still at Joost, had told him he was orchestrating a bid to purchase Skype and that he had a unique advantage over a competing bid by Friis and Zennstrom. Volpi had also offered him a job at Skype, Erenkrantz said.
Index and Volpi were not immediately available for comment.
Skype's founders had known Volpi, a former high-flyer at Cisco Systems Inc (NASDAQ: CSCO - news) , for years. Volpi had served on Skype's board before the pair of entrepreneurs recruited him to head Joost.
The case is Joost U.S. Inc, Joost N.V. and Joltid Ltd v Michelangelo Volpi and Index Ventures Management, U.S. District Court, District of Delaware, No. 09-CV-00708.
(Reporting by Thomas Hals and Ritsuko Ando) Keywords: EBAY/SKYPE
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