Microsoft to acquire Nokia for EUR 5.44 bln
View(s):US-based Microsoft will be purchasing “substantially all” of the ‘Devices and Services’ unit, including licensing of patents and mapping services, of the formerly dominant Nokia of Finland, in a EUR 5.44 billion all cash deal set to “close in the first quarter of 2014″, it was announced by both companies this week.
The announcement said that; “Building 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 was also noted that the deal, on closing, is set to transfer around 32,000 Nokia employees to Microsoft, including former Nokia President and Chief Executive Stephen Elop, who it was announced would also be stepping down from his role helming Nokia, to become Executive Vice President of its soon-to-be-acquired ‘Devices and Services’ unit. This has also ignited media speculation that Mr. Elop, a Microsoft veteran prior to taking on his Nokia position just six months ago, could also be a frontrunner to take over from current Microsoft Chief Executive Steve Ballmer, who last week revealed that he would be retiring within 12 months.
Further, the announcement also indicated; “The operations that are planned to be transferred to Microsoft generated an estimated EUR 14.9 billion, or almost 50 per cent of Nokia’s net sales for the full year 2012… 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″.
Additionally, it also emerged that “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 licence 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”.
At the same time, the announcement also quoted Mr. Ballmer as stating; “Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution… With ongoing share growth and the synergies across marketing, branding and advertising, we expect this acquisition to be accretive to our adjusted earnings per share starting in FY15, and we see significant long-term revenue and profit opportunities for our shareholders”.
Meanwhile, a separate statement issued by Nokia highlighted the Finnish company’s future, stating; “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 licencing… 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″.
(JH)