Microsoft agreed to buy online social network firm Yammer for $1.2 billion in cash, which will allow the software company to offer a service such as Facebook Inc’s to corporate customers.

Talk of a deal had circulated earlier this month, but the two companies only confirmed the deal yesterday. Yammer, which has 5 million users of its private, in-company social networks, helps companies’ internal communications and strategising by allowing employees to interact with each other freely.

Companies such as Ford, Supervalu and Deloitte are customers. The firm will become part of Microsoft’s Office unit under Kurt DelBene but will still be led by chief executive David Sacks. Microsoft has been looking for ways to make its desktop- bound products more attractive to its core corporate users and home consumers. Last year it paid $8.5bn to buy online chat company Skype.