Confirmed: Microsoft Buys Skype For £5bn

Microsoft has confirmed it is to buy Internet voice provider Skype for $8.5 billion (£5bn), as widely predicted earlier today.

The deal, which values Skype at around $13 for each of its 600 million registered users, is expected to enable Microsoft to increase its support for web calling in its Lync communications server, and its Windows Phone mobile OS, as well as compete better against Google and Facebook in social networking.

Microsoft fought off Google and Facebook

Microsoft’s bid came after Google and Facebook were reported to be interested in buying Skype, despite the fact that the company lost around $7 million last year on turnover of $860 million.

Skype has been potentially available for purchase, since eBay, which bought Skype in 2005 for $2.6 billion (£1.6bn), gave up trying to integrate it into its auction process, and sold off 70 percent of the company in 2009. Under the proposed deal eBay’s 30 percent stake would be worth $2.4 billion (£1.5bn).

Skype had investigated a flotation, which earlier this year was estimated to be worth around $1bn.

Microsoft already offers an IP telephony service called Lync that is run by the company’s Office division, and Skype could be integrated into that. It will also be made available on the company’s Windows Phone devices, but that project was already under way.