Microsoft buys $240m stake in Facebook

Rapidly rising internet star Facebook has sold a 1.6% stake to Microsoft for $240m (€168.2m), spurning a competing offer from online search giant Google.

The deal announced in San Francisco tonight after several weeks of negotiation values Facebook at $15bn (€10.5bn) - less than four years after Mark Zuckerberg, 23, started the social networking site in his Harvard University dorm room.

Microsoft will also sell internet adverts for Facebook as the site continues to expand, broadening an existing marketing relationship that began last year.

Besides validating Zuckerberg's decision to rebuff a $1bn (€700,930) takeover offer from Yahoo last year, Microsoft's money should be more than enough to pay for Facebook's ambitious expansion plans.

The Facebook investment represents a coup for Microsoft because it provides the world's largest software maker with a toehold on one of the internet's hottest platforms and a potentially lucrative forum for selling online adverts.