Microsoft Corporation and Nokia Corporation today announced that Microsoft will purchase all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services.
Under the terms of the agreement, Microsoft will pay EUR 3.79 billion
to purchase 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 the first quarter of 2014.
The deal is seen by Microsoft as a way to build on the partnership with Nokia announced in February 2011 and
the increasing success of Nokia’s Lumia smartphones. Microsoft aims to
accelerate the growth of its share and profit in mobile devices through
faster innovation, increased synergies, and unified branding and
marketing. For Nokia, this transaction is expected to be significantly
accretive to earnings, strengthen its financial position, and provide a
solid basis for future investment in its continuing businesses.
“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.”
“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.”
“Building on our successful partnership, we can now bring together
the best of Microsoft’s software engineering with the best of Nokia’s
product engineering, award-winning design, and global sales, marketing
and manufacturing,” said Stephen Elop, who following today’s
announcement is stepping aside as Nokia President and CEO to become
Nokia Executive Vice President of Devices & Services. “With this
combination of talented people, we have the opportunity to accelerate
the current momentum and cutting-edge innovation of both our smart
devices and mobile phone products.”
TERMS OF THE AGREEMENT
Under the terms of the agreement, 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, Devices & Services-related
sales and marketing activities, and related support functions. Approximately 32,000 Nokia employees are expected to transfer to
Microsoft, including 4,700 in Finland and 18,300 employees
directly involved in manufacturing, assembly and packaging of products
worldwide. The operations that are planned to be transferred to
Microsoft generated an estimated EUR 14.9 billion, or almost 50 percent
of Nokia’s net sales for the full year 2012.
Microsoft is acquiring 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. Nokia's Windows Phone business has seen 78% year over year growth and achieved over 10% market share in several markets.
As part of the transaction, Nokia is assigning to Microsoft its
long-term patent licensing agreement with Qualcomm, as well as other
licensing agreements.
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 continue to own and manage the
Nokia brand. This element provides Microsoft with the opportunity to
extend its service offerings to a far wider group around the world while
allowing Nokia’s mobile phones to serve as an on-ramp to Windows Phone.
Nokia will retain its patent portfolio and will grant Microsoft a
10-year license to its patents at the time of the closing. Microsoft
will grant Nokia reciprocal rights to use Microsoft patents in its HERE
services. In addition, Nokia will grant Microsoft an option to extend
this mutual patent agreement in perpetuity.
In addition, Microsoft will become a strategic licensee of the HERE
platform, and will separately pay Nokia for a four-year license.
Building Nokia's next chapter
Following
the transaction, Nokia plans to focus on its three established
businesses, each of which is a leader in enabling mobility in its
respective market segment: NSN, a leader in network infrastructure and
services; HERE, a leader in mapping and location services; and Advanced
Technologies, a leader in technology development and licensing.
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See more at:
http://press.nokia.com/2013/09/03/nokia-to-sell-devices-services-business-to-microsoft-in-eur-5-44-billion-all-cash-transaction/#sthash.HLOCKlvq.dpuf
Building Nokia's next chapter
Following
the transaction, Nokia plans to focus on its three established
businesses, each of which is a leader in enabling mobility in its
respective market segment: NSN, a leader in network infrastructure and
services; HERE, a leader in mapping and location services; and Advanced
Technologies, a leader in technology development and licensing.
-
See more at:
http://press.nokia.com/2013/09/03/nokia-to-sell-devices-services-business-to-microsoft-in-eur-5-44-billion-all-cash-transaction/#sthash.HLOCKlvq.dpu
Building Nokia's next chapter
Following
the transaction, Nokia plans to focus on its three established
businesses, each of which is a leader in enabling mobility in its
respective market segment: NSN, a leader in network infrastructure and
services; HERE, a leader in mapping and location services; and Advanced
Technologies, a leader in technology development and licensing.
-
See more at:
http://press.nokia.com/2013/09/03/nokia-to-sell-devices-services-business-to-microsoft-in-eur-5-44-billion-all-cash-transaction/#sthash.HLOCKlvq.dpuf
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