Microsoft Rumoured To Buy Skype For $7.5bn

Microsoft is reportedly close to a deal to buy Skype for between $7 billion (£4.2bn) and $8 billion (£4.9bn), in what would be its largest-ever acquisition.

But the deal is not yet complete and could still fall apart, according to The Wall Street Journal, which reported the possible deal in its online edition. The blog GigaOm also reported Microsoft’s interest in Skype.

Facebook, Google interested

The latest reports follow a rumour reported by Reuters that Facebook and Google were looking to form partnerships with Skype and that Facebook had held talks about acquiring the IP telephony service.

Reports said that intensive talks had been held over the weekend and that a deal could be announced as early as Tuesday.

The deal would give Microsoft access to Skype’s 660 million users worldwide, as well as a substantial foothold in voice and video communications. The technology could be incorporated into products such as the Xbox 360 or even Office.

On the other hand, Microsoft is currently making a big push into the mobile market, for which it needs the support of mobile carriers. Skype’s technology is controversial with mobile companies, who see it as competing with their own voice-calling services.

Wide appeal

eBay bought Skype in 2005 for $2.6 billion (£1.6bn), but was not able to integrate the technology into its auction services as had been hoped. The company sold off a 70 percent stake in Skype at the end of 2007. Under the proposed deal eBay’s 30 percent stake would be worth $2.4billion (£1.5bn).

Google investigated buying Skype in 2005, but backed down amidst questions over essential patents for the Skype technology that are linked to Skype’s founders, amongst other issues.

Skype had investigated a flotation, which would have raised an estimated $1bn.

Microsoft already offers an IP telephony service called Lync that is run by the company’s Office division.

Created in 2003 by Swedish entrepreneur Niklas Zennström and the Dane Janus Friis, Skype has become a leading VoIP service provider, with 663 million registered users worldwide at the end of last year.

In August last year, Skype expressed its intention to go public by filing a registration statement. However, the IPO was put on hold by Tony Bates, a new CEO appointed in October, who has postponed the process until the second half of 2011.