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Microsoft has confirmed that it has agreed to buy internet communications service Skype. The company is to pay $8.5 billion (£5.2bn) in cash from the investor group led by Silver Lake. The agreement has been approved by the boards of directors of both Microsoft and Skype.

Microsoft say that the acquisition 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. The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.

Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.

“Skype is a phenomenal service that is loved by millions of people around the world,” said Microsoft CEO Steve Ballmer. “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 become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.

Founded in 2003 and based in Luxembourg, Skype was acquired by eBay for $2.6bn in September 2005, and then acquired by an investment group led by Silver Lake in November 2009.

Ben Woods, head of research group CCS Insight, is reported to have commented “The big unanswered question is how do Skype assets work for Microsoft… how do you justify the price?”