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Microsoft acquires Nokia for EUR 5.44 billion, plans to accelerate Windows

by on September 3, 2013
 

Here is the hot news. Microsoft acquires Nokia. Microsoft and Nokia have formally agreed for the software giant’s acquisition of Finnish handset maker’s all businesses including Nokia Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services. The EUR 5.44 billion deal is expected to close in the first quarter of 2014.

Microsoft Corporation from Redmond, Washington and Nokia Corporation from Espoo, Finland have jointly announced the decision.  The terms of the agreement reveal that the total transaction value of the deal would amount to EUR 5.44 billion in cash, including EUR 3.79 billion for all Nokia’s Devices & Services business and EUR 1.65 billion for license Nokia’s patents. Microsoft will fund the transaction by using its overseas cash resources. The transaction is expected to be completed in the first quarter of 2014.

The deal is founded on the partnership of Microsoft and Nokia that was announced in February 2011 and the success of Nokia’s Lumia smartphones.  Steve Ballmer, Microsoft chief executive officer said on the acquisition, “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,”  and add “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.”

Risto Siilasmaa, Chairman of the Nokia Board of Directors and Nokia Interim CEO said, “For Nokia, this is an important moment of reinvention and from a position of financial strength, we can build our next chapter,” said and add that, “After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders. Additionally, the deal offers future opportunities for many Nokia employees as part of a company with the strategy, financial resources and determination to succeed in the mobile space.”

Important issues of the agreement:

  • Microsoft will acquire substantially all of Nokia’s Devices and Services business, including the Mobile Phones and Smart Devices business units
  • Nokia’s an industry-leading design team,
  • Operations including all Nokia Devices & Services-related production facilities,
  • Devices & Services-related sales and marketing activities, and related support functions
  • Nokia will assign to Microsoft its long-term patent licensing agreement with Qualcomm, as well as other licensing agreements.
  • Nokia will continue to own and manage the Nokia brand.
  • Nokia will retain its patent portfolio and will grant Microsoft a 10-year non-exclusive license to its patents at the time of the closing.