In a major move, Nokia Corp today announced that it has signed an agreement with Microsoft to sell substantially all of its Devices and Services business and licence its patents. The deal charged about $7.2 billion (EUR 5.44 billion) in cash and the transaction is expected to close in the first quarter of 2014.
On announcing the acquisition of Nokia business units, Steve Ballmer, Microsoft chief executive officer, said;
“It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services. In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution.”
As per the agreement, Nokia will get $5 billion from Microsoft for selling substantially all of its Devices and Services business. The software giant will additionally pay $2.2 billion to licence Nokia’s patents.
Following the transaction, Nokia set to focus on its three established businesses, including Nokia Siemens Network (NSN), HERE and Advanced Technologies. Approximately 32,000 people, including 4,700 people in Finland, currently working in Nokia are expected to transfer to Microsoft soon after the closing of transaction.
As the result of acquisition, Nokia’s Devices & Services business, including the Mobile Phones and Smart Devices business units, will be in the hands of Microsoft. The software giant will continue to encourage its Windows Phone platform with Nokia’s Lumia series devices but still there is a question for the future success of Nokia’s Asha series feature phones as the acquisition might result a fall in manufacturing of feature phones.
Commenting on the acquisition, Nokia Chairman and interim CEO Mr. Siilasmaa said;
“Today is an important moment of change and reinvention for Nokia and its employees. With our strong corporate identity, leading assets and talent, and from a position of renewed financial strength, we will build Nokia’s next chapter.”
Once the king of mobile handset world is now set to be in the control of the software giant. However, Microsoft will lead Nokia team for future announcements, some of Nokia’s current executives, including Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber, would also transfer to Microsoft soon after the closing of transaction.