Microsoft Corporation (NASDAQ:MSFT) and Nokia Corporation (NYSE:NOK) forge handshake
The long awaited will-happen, will-not-happen announcement was finally made and Microsoft Corporation (NASDAQ:MSFT) has finally announced that it will be acquiring Nokia Corporation (NYSE:NOK)’s Devices and Services Division for €5.44 billion. This deal includes the right to use its mapping services as well as the right to license its patent.
Under the terms of the agreement, MSFT will also be acquiring the smartphone and mobile phone business units. This is inclusive of the Asha and the Lumia brands as well as their related facilities that Nokia owns. Microsoft will also be absorbing around 32,000 NOK employees. The latter has agreed to transfer the long-term licensing agreement it has with Qualcomm, to Microsoft.
Nokia will be retaining its patent portfolio and has agreed to grant MSFT the license to utilize its patents for ten years. These patents are specifically for the HERE services. Microsoft has stated that it will be paying €1.5 B in 3 installments. These will be in the form of €500m each worth of convertible notes. The company will be using the available cash overseas for funding this transaction. The deal is expected to close in the 2014 Q1. MSFT will also be establishing a new data-center in Finland. This will serve the company’s European customers and the plan is to invest $250m over a span of a few years.
The NOK Chief Executive officer, Stephen Elop will be stepping down from his position and will take over as executive vice-president of the Devices and Services division. He stated that this agreement will now bring together the best of NOK’s award-winning designs, product engineering, marketing, global sales and manufacturing and MSFT’s software engineering.
The MSFT Chief Executive Officer, Steve Ballmer said that this agreement is a strong step into the future and both the companies’ employees, consumers and shareholders will gain from it. It will boost MFST’s profits and share in phones and also add muscle to the overall-opportunities for MSFT and partners across the entire family of services and devices. Microsoft Corporation (NASDAQ:MSFT) shares dipped 4.55% and Nokia Corporation (NYSE:NOK) shares rose 3.28% in Tuesday’s trading.