NEW YORK: In one of its biggest buyouts in over three decades, Microsoft will snap up Skype for USD 8.5 billion in cash, a move that would bolster the software major's presence in the highly competitive Internet market.

The deal, announced today, would be a shot in the arm for cash-rich Microsoft in competing with strong rivals such as Google and Apple apart from strengthening its footprint in the consumer markets.

"The companies have entered into a definitive agreement under which Microsoft will acquire Skype, the leading Internet communications company, for USD 8.5 billion in cash from the investor group led by Silver Lake," the two firms said in a joint statement.