Microsoft has confirmed that it has agreed to buy Skype.
The deal will see Microsoft pay $US8.5 billion for the internet phone service, making it Microsoft's largest acquisition.
Skype has 663 million global users. In August last year it announced plans for a share flotation, but this was subsequently put on hold.
Internet auction house eBay bought Skype for $US2.6 billion in 2006, before selling 70% of it in 2009 for $US2 billion.
The BBC reports this majority stake was bought by a group of investors led by private equity firms Silver Lake and Andreessen Horowit.
Other major shareholders include Joltid, a tech-firm, and the Canada Pension Plan Investment Board.
Skype will now become a new division within Microsoft. Chief executive Tony Bates will continue to lead the business, reporting directly to M/S chief executive Steve Ballmer.
The BBC reports that some experts question whether Microsoft is paying too much for a company that has struggled to turn a profit.
Skype was founded in 2003. It is based in Luxembourg.
