By Scott Morrison and Geoffrey A. Fowler SAN FRANCISCO -(Dow Jones)- A messy legal dispute that has cast a cloud over eBay Inc.'s (EBAY) pending sale of Internet telephony unit Skype could soon be resolved, with a key member of the investor group being dropped, people familiar with the situation said. An agreement to end litigation involving Skype could be announced as early as this week, the people said. "The probability of the deal getting done is very, very high," said one of the people, who asked not to be named. The proposed settlement would be between the investor group that agreed to buy 65% of Skype from eBay for $2 billion and the Internet telephony service's founders, who have sued in an effort to block the deal. Integral to the proposed settlement would be dropping a key figure from the investor group and adding Skype co-founders Niklas Zennstrom and Janus Friis. Dropped from the group would be London-based Index Ventures Management S.A., home to partner Mike Volpi. Previously, Volpi served as chief executive of Joost NV, an online video company created by Zennstrom and Friis. Volpi was the driving force behind the investor group's bid for Skype, but quickly found himself at the center of controversy after Zennstrom and Friis alleged in legal filings that he had breached his fiduciary duty while CEO of Joost by using confidential information to broker the group's bid for Skype. Under the proposed agreement, Zennstrom and Friis would receive an undisclosed stake in Skype and at least one seat on the company's board. They would also end a separate intellectual property dispute against eBay. It was not immediately clear whether they would drop their suit against Volpi and Index. The legal tussle stems from an agreement struck in September by eBay to sell a majority stake in Skype to a group of investors. In addition to Index Ventures, the group includes private-equity firm Silver Lake, venture-capital firm Andreessen Horowitz and the Canada Pension Plan Investment Board. Zennstrom and Friis had themselves been interested in buying Skype from eBay before the investor group stepped in. One person familiar with the situation said Zennstrom and Friis let it be known they would be willing to negotiate an end to their dispute over Skype. Representatives of Index Ventures and Silver Lake did not immediately respond to requests for comment. Andreesen Horowitz was not available for comment. EBay CEO John Donahoe has said the deal would close this month. -By Scott Morrison; Dow Jones Newswires; 415-765-6118;scott.morrison@dowjones.com; and Geoffrey A. Fowler; Wall Street Journal; 415-765-8258; geoffrey.fowler@wsj.com
