Microsoft confirmed Tuesday it is buying Skype for 8.5 billion dlrs in cash. The agreement has been approved by the boards of directors of both companies.

"Skype is a phenomenal service that is loved by millions of people around the world," Microsoft CEO Steve Ballmer said in a press release. "Together we will create the future of real-time communications."

Added Skype CEO Tony Bates: ""Together, we will be able to accelerate Skype's plans to extend our global community and introduce new ways for everyone to communicate and collaborate."

Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.

The two companies said the acquisition will increase the accessibility of real-time video and voice communications. They predicted it would bring benefits to both consumers and enterprise users and generate "significant new business and revenue opportunities."