Microsoft in US$8.5 billion hunt for Skype

Microsoft is set to confirm that it has agreed to buy Internet phone service Skype, according to the BBC.

According to some reports, the deal could be worth as much as US$8.5 billion, which would make it Microsoft’s largest acquisition.

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

eBay bought Skype for US$2.6 billion in 2006, before selling 70 per cent of it in 2009 for US$2 billion.

Skype is now majority-owned by a group of investors, led by private equity firms Silver Lake and Andreessen Horowitz.

Analysts say Microsoft wants to buy Skype to improve its video conferencing services.

Some experts have questioned whether Microsoft is planning to pay too much for a company that has struggled to turn a profit.