Microsoft To Acquire Nokia’s Devices & Services Division For $7.2 Billion: A Breakdown

Posted on Sep 3 2013 - 11:18am by Editorial Staff

Nokia

Microsoft has finally taken the curtain off today by announcing that it has acquired Nokia’s devices and services business for €5.44 billion ($7.2 billion) in total i.e. €3.79 billion ($5 billion) for the business and spending €1.65 billion ($2.2 billion) to license Nokia’s patents. The transaction is expected to close in the first quarter of 2014.

“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.”

Acquisition Highlights:

  • Nokia expects that Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber would transfer to Microsoft at the anticipated closing of the transaction.
  • Under the deal, Microsoft will acquire complete Nokia’s Devices and Services business, including the Mobile Phones and Smart Devices business units.
  • The acquisition will leads to approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide.
  • Microsoft is acquiring Nokia’s Smart Devices business unit, including the Lumia brand and products.
  • 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 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.
  • 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, 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.
  • The company would invest more than a quarter-billion dollars in capital and operation of the new data center over the next few years, with the potential for further expansion over time.
  • Nokia plans to hold an Extraordinary General Meeting on November 19, 2013.

Photo Credit: Flickr/John Karakatsanis

About the Author
Editorial Staff

Editorial Staff at I2Mag is a team of subject experts led by Karan Chopra.