Microsoft Acquires Skype for $8.5 Billion

The software giant, Microsoft has bought Skype for $8.5 billion, in all cash deal.

The agreement has now been approved by the boards of directors of both Microsoft and Skype.

Skype will become a new business division within Microsoft, and chief exec Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Microsoft CEO Steve Ballmer.

Skype has been up for sale for some time. eBay and Silver Lake Partners, previous share holders of Skype have been getting nervous about the delayed initial public offering and have been pushing for a sale of Skype.

Facebook and Google were also in the list to acquire Skype, but Microsoft, though a late applicant, has now taken it.

Possible Benefits Microsoft May get from Skype Now:

  • Skype gives Microsoft a  boost in the enterprise collaboration market, thanks to Skype’s voice, video and sharing capabilities, especially when competing with Cisco and Google.
  • It gives Microsoft a working relationship with carriers, many of them looking to partner with Skype as they start to transition to LTE-based networks.
  • It would give them a must-have application/service that can help with the adoption of the future versions of Windows Mobile operating system.
  • However, the biggest reason for Microsoft to buy Skype is Windows Phone 7 (Mobile OS) and Nokia. The software giant needs a competitive offering to Google Voice and Apple’s emerging communication platform, Facetime.
  • The purchase also provides Microsoft with a wealth of p2p and collaboration technology expertise and intellectual property, an increasingly important asset to have these days.
  • It also brings reach: Skype’s user base is comparable to that of Facebook in terms of size (more than 600 million registered users).

Who Gets How Much?

  • eBay gets $2.55 billion for its 30 percent stake in Skype.
  • Niklas Zennström and Janus Friis, the co-founders with their 14-percent stake, take home about $1.19 billion.
  • Silver Lake, Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB) own 56 percent of the company and that stake is worth $4.76 billion.
  • Andreessen Horowitz had 3 percent of the deal and made $205 million profit on their $50 million initial investment.

It may be pre-predictions but Microsoft has got one big tool in his hand now and surely the competitors must be thinking what is coming next? The integration of Skype in the later version of Windows will surely make Google and Facebook to feel the heat.

Whatsoever is the output, Microsoft seems to be back in the battle with Google Voice, while Facebook still stands at the other end.

via GigaOm and TechCrunch