Microsoft agrees to buy Skype for US$8.5bn

Tuesday, May 10, 2011

Microsoft (Nasdaq: MSFT) has confirmed an US$8.5bn takeover of free internet telephony provider Skype, making it the former's largest acquisition, the companies announced in a statement Tuesday.

Through the deal, Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and other Windows devices, while Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities.

According to the release, Skype will become a new business division within Microsoft. Skype CEO Tony Bates will assume the role of Microsoft Skype Division president, reporting directly to Microsoft CEO Steve Ballmer.

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"Skype is a phenomenal service that is loved by millions of people around the world. Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world," said Ballmer.

In 2006, internet auction house eBay bought Skype for US$2.6bn, before selling 70% of it in 2009 for US$2bn.

Skype was founded in 2003 and has more than 660m registered users.