Two Years after the Finnish phone maker Nokia and Microsoft inked a partnership for Windows Phone software, the two giants have geared up for the biggest collaboration they have seen.
Microsoft Corp. struck a $7 billion deal to acquire Nokia Corp.’s cellphone business, a move that will get them closer to catching up in a fast-growing mobile market that is now dominated by Samsung Electronics Co. and Apple Inc. As part of the deal, Microsoft will bring aboard 32,000 Nokia employees including CEO Stephen Elop, who is believed to be among the contenders for Mr. Ballmer’s job. The deal comes at a time when Microsoft’s announcement that Chief Executive Officer Steve Ballmer will retire as soon as a successor is found.
The news comes after a few weeks when Wall Street Journal reported a claim that Microsoft was looking to buy Nokia. The companies said late Monday that Microsoft will pay €3.79 billion to buy “substantially all” of the Nokia business, which includes its smartphone operations. The Redmond, Wash., company will also pay €1.65 billion to license Nokia’s patents, the companies said, bringing the deal to €5.44 billion, or $7.18 billion.
“I have mixed feelings, because I’m a Finn. As a Finnish person, I cannot like this deal. It ends one chapter in this Nokia story,” said Juha Varis, Danske Capital’s senior portfolio manager whose fund owns Nokia shares. “On the other hand, it was maybe the last opportunity to sell it.”
For Nokia, this transaction will strengthen its financial position, and provide a solid basis for future investment in its continuing businesses. Building on the partnership with Nokia that was announced in February 2011 to provide the Windows Phone Software and the success of Nokia’s Lumia smartphones, Microsoft aims to accelerate the growth of its share and profit in mobile devices business and in turn develop the Windows Eco-system.
“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.
- Microsoft will acquire substantially all of Nokia’s Devices and Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services-related production facilities.
- Microsoft is acquiring Nokia’s Smart Devices business unit, including the Lumia brand and products. Lumia handsets have won numerous awards and have grown in sales in each of the last three quarters, with sales reaching 7.4 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 continue to own and manage the Nokia brand.
- Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four-year license.
- Microsoft also announced that it has selected Finland as the home for a new data center that will serve Microsoft consumers in Europe.
“We will continue to build the mobile phones you’ve come to love, while investing in the future — new phones and services that combine the best of Microsoft and the best of Nokia,” Ballmer and Elop wrote.