Nokia Corporation today (3 September 2013) announced that it is to sell mobile phone Devices & Services business and licence its patents to Microsoft for Euro 5.44bn (£4.6bn) in cash. The deal is expected to close in the first quarter of 2014, subject to approval.
Following the transaction, Nokia plans to focus on its three established businesses: NSN (Nokia Solutions & Networks) - network infrastructure and services; HERE - mapping and location services; and Advanced Technologies - technology development and licensing.
Nokia expects to book a gain on sale of approximately Euro 3.2bn (£2.7bn) from the deal and expects to strengthen its financial position and provide a solid basis for future investment in these three businesses.
Risto Siilasmaa, chairman of the Nokia Board of Directors and, following today's announcement, also Nokia interim CEO, said: “After a thorough assessment of how to maximise shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders.”
Subject to the closing of the transaction, Microsoft will acquire substantially all of Nokia's Devices & Services business, including the Mobile Phones and Smart Devices business units, as well as the design team, operations - including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities, and related support functions. Approximately 32,000 people are expected to transfer to Microsoft.
Nokia's CTO (Chief Technology Office) organisation and patent portfolio will remain within the Nokia Group. The operations that are planned to be transferred to Microsoft generated an estimated EUR 14.9bn (£12.6bn), or almost 50%, of Nokia's net sales for the full year 2012.
Nokia will retain its headquarters in Finland. Excluding the approximately 32,000 people planned to transfer to Microsoft, Nokia would have employed approximately 56,000 people at the end of the second quarter 2013.
This announcement does not change the current leadership for Nokia Solutions and Networks. Rajeev Suri will continue to serve as CEO, NSN, reporting to NSN's Board which continues to be chaired by Jesper Ovesen, who continues to serve as NSN's executive chairman and reports to Risto Siilasmaa.
Nokia acquired whole ownership of NSN in August 2013 after buying out Siemens’ 50% share of the Nokia Siemens Networks joint venture.
Commenting on the deal, Ben Wood, chief of research, CCS Insight, said the moves was a bold, but entirely necessary gamble by Microsoft as mobile needs to be a cornerstone of Microsoft's business for future success and that it should be positive for both companies.
However, he added: “What this means for the ‘New Nokia’ is less clear. The combination of Nokia Siemens Networks, Here Maps, the patent portfolio and CTO’s office is not currently an organisation with compelling logic.”