Microsoft acquires Skype

REDMOND, Wash., May 10 (UPI) -- U.S. technology giant Microsoft has acquired communications software leader Skype for $8.5 billion in cash, the companies announced Tuesday.

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

Skype will be a new business division within Microsoft, with Skype CEO Tony Bates becoming president of the Microsoft Skype Division, reporting directly to Ballmer, the companies said in a news release.

Skype will support Microsoft devices such as Xbox and Kinect, Windows Phone and Windows, the companies said. Microsoft will connect Skype users with Lync, Outlook and Xbox Live and will invest in and support Skype users on non-Microsoft platforms, the announcement said.

"Microsoft and Skype share the vision of bringing software innovation and products to our customers," Bates said. "Together, we will be able to accelerate Skype's plans to extend our global community and introduce new ways for everyone to communicate and collaborate."

Speaking for the investor group that sold Skype to Microsoft, Silver Lake Managing Director Egon Durban said the group was "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."

Skype, founded in 2003, was acquired by eBay in September 2005, then acquired by the Silver Lake-led investment group in November 2009. Other members of the selling investor group include eBay International AG, CPP Investment Board, Andreessen Horowitz and Joltid Limited in partnership with Europlay Capital Advisors.

Microsoft and Skype boards of directors have approved the acquisition agreement but the deal is subject to regulatory approvals. Microsoft said the two companies hope to get all regulatory clearances this year.