Microsoft confirms deal to buy Skype

Microsoft has confirmed that it has agreed to buy internet phone service Skype. The deal will see Microsoft pay $8.5bn (£5.2bn) for Skype, making it Microsoft's largest acquisition.

Luxembourg-based Skype has 663 million global users. In August last year it announced plans for a share flotation, but this was subsequently put on hold.

The CEO of Microsoft, Steve Ballmer, and CEO of Skype, Tony Bates, spoke about how both businesses would benefit from the deal.