Microsoft Acquires Skype

Microsoft and Skype have announced that they have concluded a deal under which Microsoft will acquire Skype. The deal is worth $8.5 billion in cash. According to a press release, the deal has been approved by the boards of directors of both the giants.

Skype, which was founded in 2003, is based in Luxembourg. It was acquired by eBay in September 2005. Later, in November 2009, it was acquired by an investment group led by Silver Lake. Other members of the investor group include eBay International AG, CPP Investment Board, Joltid Limited in partnership with Europlay Capital Advisors, and Andreessen Horowitz.  Skype has made a remarkable progress ever since; recently it added Group Video to its impressive array of communication services.

Skype had 170 million users in 2010 and has a well-established presence in internet telephony. Microsoft is also deep into communications with its Outlook, Hotmail, Lync, and Messenger.

According to the press release, "The combination will extend Skype's world-class brand and the reach of its networked platform, while enhancing Microsoft's existing portfolio of real-time communications products and services."

The press release further states: "Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms."

"Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft CEO Steve Ballmer. "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," Ballmer added.

The press release further states that Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of President of the Microsoft Skype Division, reporting directly to Ballmer.

On behalf of the investor group that has sold Skype to Microsoft, Egon Durban, Managing Director of Silver Lake, said : "We are thrilled with Skype's transformation during the period of our ownership and grateful for the extraordinary commitment of its management team and employees. We are excited about Skype's long-term future with Microsoft, as it is poised to become one of the world's most dynamic and comprehensive communications platforms."

The acquisition of Skype by Microsoft is subject to regulatory clearances.