#BigDeal: Microsoft to acquire Nokia’s Devices & Services business, License Patents [EUR 5.44 billion Cash Deal]

Microsoft will also acquire Lumia and Asha brand and will license the Nokia brand for use with current Nokia mobile phone products.
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Microsoft will purchase substantially all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services.Nokia Lumia 620 hardware- 1

Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash. Microsoft will draw upon its overseas cash resources to fund the transaction. The transaction is expected to close in Q1 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.

Terms of Microsoft:Nokia Deal

  • 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide.
  • Microsoft is acquiring Nokia’s Smart Devices business unit, including the Lumia brand and products.
  • Microsoft is also acquiring Nokia’s Mobile Phones business unit, which serves hundreds of millions of customers worldwide, and had sales of 53.7 million units in the second quarter of 2013. Microsoft will acquire the Asha brand and will license the Nokia brand for use with current Nokia mobile phone products.
  • 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. Microsoft will grant Nokia reciprocal rights to use Microsoft patents in its HERE services.

As part of the deal, Stephen Elop will join Microsoft.

Nokia Market Share - The Writing is on the Wall

 

Nokia, that Elop(ed) with Microsoft in 2011 has seen success with Lumia brands and given the changing mobile landscape, Microsoft needs a better control over the device division.

“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,” said Steve Ballmer, Microsoft chief executive officer. “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.”

“We are excited and honored to be bringing Nokia’s incredible people, technologies and assets into our Microsoft family. Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution,” Ballmer said. “With ongoing share growth and the synergies across marketing, branding and advertising, we expect this acquisition to be accretive to our adjusted earnings per share starting in FY15, and we see significant long-term revenue and profit opportunities for our shareholders.”

“For Nokia, this is an important moment of reinvention and from a position of financial strength, we can build our next chapter,” said Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following today’s announcement, Nokia Interim CEO. “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.” [Announcement]

Recommended Read : Is Stephen Elop the Best Thing That Happened to Nokia (After 1100)?

The Mobile Landscape just got more competitive, but the key question is what is left of Nokia after this deal?

– Recommended Read : The bigMobility Trend in India

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