Microsoft Acquiring Skype For $8.5B
The world’s largest software company, Microsoft Corp. (NASDAQ:MSFT) has announced its plans to acquire Skype Technologies for a sum of $8.5 billion, which will give Microsoft access to more than 663 million customers of the Internet calling service.
The acquisition of Skype Technologies by Microsoft Corp. will be from Silver Lake, which currently owns the Luxemburg Company. The announcement was made by the two companies on Tuesday in a joint statement. The board of directors of the two companies has approved the acquisition.
The acquisition of Skype by Microsoft will help the world’s largest software maker to attract the fast depleting web users and will also to reduce the huge gap between itself and Google in terms of internet advertising. The acquisition will also help Microsoft gain space in the smartphone Voip space where Skype applications are increasingly replacing voice calls as the primary means of telecommunications. This is the largest acquisition of Microsoft in the past five years, beating the $6 billion acquisition of AQuantive Inc. in 2007.
According to analysts, the acquisition will have a profound effect on Microsoft’s foray into telecommunication, where it is fast losing customers from its live service to Gtalk and Skype. The benchmark for the internet calling industry has been set by Skype.
Skype had announced its plans to offer an IPO of $100 million in shares last august. The plans will however be crushed with the acquisition of Skype. Skype has struggled since the past few years to convert its PC to PC users to convert to PC-to Phone subscribed customers or paying customers.
The stocks of Microsoft fell by about 4 cents after the announcement in the Nasdaq stock exchange and by 1.8 percent in the German trading.
Microsoft’s $8.5 billion offer will also include a debt amount owed by Skype. The debt is reported to be close to $775 million also a $30 million revolving credit line. These debts were reported by Skype in its April filings.
The Chief Executive Officer of Microsoft, Steve Ballmer is trying to revive Microsoft’s online services which last quarter reported a $700 million operating loss. Microsoft’s internet search engine lags behind Google (NASDAQ:GOOG) and its partnership with Yahoo! Inc. (NASDAQ:YHOO) isn’t helping its search engine to grow either.
Microsoft’s bid for Yahoo! Inc. in 2008 struck a bad cord with the federal agencies which blocked the merger. However, Microsoft instead signed an agreement with Yahoo to provide search results for Yahoo.
