Microsoft announced Tuesday it is to take over internet phone company Skype from an investor group led by Silver Lake for 8.5 billion dollars, in the computer software company's largest-ever acquisition, dpa reported.
"Skype is a phenomenal service that is loved by millions of people around the world," Microsoft chief executive Steve Ballmer said in a statement issued from Microsoft headquarters in Redmond, Washington.
Skype would support Microsoft devices like Xbox and Windows Phone, while Microsoft would connect Skype users with Lync, Outlook, Xbox Live and other online communities, Microsoft said.
The company pledged to continue to support Skype clients on non- Microsoft platforms.
"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 said.
Skype, which is based in Luxembourg, is to become a new business division within Microsoft, with Skype chief executive Tony Bates as president of the Microsoft Skype Division.
"Microsoft and Skype share the vision of bringing software innovation and products to our customers," Bates said, adding that Skype's plans to extend its services would be accelerated.
The deal has been approved by the boards of both companies.
"This could give Microsoft a much-needed kickstart" in telecommunications, Paolo Pescatore, an analyst at CCS Insight in London told Bloomberg news agency.
Skype had "certainly set the benchmark and gained a lot of traction" in voice services, he said.
Microsoft shares declined in German trading almost 2 per cent on the news to 25.58 dollars after falling in Monday trading.
The deal boosts Microsoft's ailing smartphone business. Skype had reportedly also been in talks with Google and Facebook.
Skype account holders can make free telephone and video calls using the internet. The company derives its income from calls to and from landlines. It has more than 550 million registered users worldwide.
In 2005, the online auctioneer eBay acquired Skype from its developers for 2.6 billion dollars. It sold the company for 1.9 billion four years later, after it became apparent that the internet telephone company was not suited to the online trading platform.