Microsoft in shock Skype acquisition

Steve Dinneen
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MICROSOFT stunned the market yesterday with the announcement it will buy online video-calling service Skype for an eye-watering $8.5bn (£5.2bn).

Chief executive Steve Ballmer smashed the software giant’s acquisition record, which had stood at $6.3bn for digital marketing firm aQuantive.

Ballmer has been sitting on a vast war chest, with investors calling for a marquee acquisition. Yesterday they got one.

Skype boss Tony Bates will become president of the newly-formed Microsoft Skype Division.

The loss-making site has had a rollercoaster few years. It was sold to eBay in 2005 for $3.1bn but the auction site struggled to integrate it into its platform. The founders then joined a consortium to buy back a 70 per cent stake.

EBay has emerged from the saga with a tidy profit, booking $2.55bn from Microsoft and clawing back $1.9bn in the sale to the consortium in 2009.

Ballmer said the purchase will “increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and generating significant new business and revenue opportunities”.

He added: “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 anywhere in the world.”

Microsoft snapped the firm up after speculation of a tie-up between Skype and either Google or Facebook. The Luxembourg-based firm, which clocked revenues of $860m in 2010 with a net loss of $7m, had planned an IPO for the second-half of this year. It had hoped to raise $1bn.

Ballmer said his company did not use Wall Street advisers on the deal, approaching the investor group that owns Skype directly. Skype was advised by Goldman Sachs and JPMorgan.