Nokia today announced that Microsoft will acquire Nokia’s devices and services unit and license the company’s mapping services in a deal worth $7.2 billion.
Microsoft will be acquiring substantially all of Nokia’s devices and services business for $5 billion. Microsoft will also license Nokia’s patents and mapping assets for another $2.17 billion making the complete deal worth $7.17 billion in cash. As part of the deal, Stephen Elop will step down as Nokia chief executive to become the executive vice president of the devices and services division.
“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. “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.”
“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.
Apart from the smartphone business, Microsoft will also acquire Nokia’s mobile phone business, which includes the Asha series as well its low-cost feature phones. While nothing is being said at the moment, we expect Microsoft will shut down or spin off this part of business, which ironically also provides the maximum sales and revenues for Nokia’s phone business.
As part of the deal, Nokia will grant Microsoft a 10-year non-exclusive licence to its patents, and Microsoft will grant Nokia reciprocal rights to use to its location-based patents. The deal, which is expected to close in the first quarter of 2014, will be a step further into Microsoft’s new direction of becoming a devices and services company.
When the deal closes, approximately 32,000 Nokia employees will transfer to Microsoft, including 4,700 in Finland and 18,300 involved in manufacturing.