Microsoft announced on Monday that it would buy Yammer for $1.2 billion, according to The New York Times.
Yammer is a social networking service for businesses and under the terms of the deal, it will be added to Microsoft's Office division. Its chief executive, David Sacks, will continue to lead the company, said The Times.
The news comes nearly two weeks after reports of the deal first leaked, said the Associated Press.
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Yammer has more than 5 million corporate users and provides companies with a way to create private social networks for their employees, according to the AP.
Based in San Francisco, Yammer had raised about $142 million since its inception four years ago, reported the AP.
"The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love," Steven A. Ballmer, Microsoft's chief executive, said in a statement, according to The Times.
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Yammer CEO Sacks said, "We had a vision for how social networking could change the way we work. Joining Microsoft will accelerate that vision and give us access to the technologies, expertise and resources we'll need to scale and innovate," according to the AP.
Reuters noted that the move comes as Microsoft looks for ways to make its products appeal to corporate users and home consumers.
Last year, Microsoft bought the online chat company Skype for $8.5 billion, which it then integrated into its offerings, said Reuters.