Nokia To Sell Mobile Phone Business to Microsoft
by Sanjay Bafna on September 3, 2013 10:58 am | General, Mobile Phones
24 Comments
Nokia today announced that it has signed an agreement to enter into a
transaction whereby Nokia will sell substantially all of its entire
Mobile Devices, Smart phones & Services business and licence its patents
to Microsoft for EUR 5.44 billion in cash, payable at closing.
Nokia to sell Mobile Business to Microsoft
Subject to the closing of the transaction, Microsoft will acquire
substantially all of Nokia’s Devices & 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 production facilities, Devices & Services-related sales and
marketing activities, and related support functions.
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.
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.
As part of the transaction, Nokia will grant Microsoft a 10 year
non-exclusive license to its patents as of the time of the closing, and
Microsoft will grant Nokia reciprocal rights related to HERE services.
In addition, Nokia will grant Microsoft an option to extend this mutual
patent agreement to perpetuity. Of the total purchase price of EUR 5.44
billion, EUR 3.79 billion relates to the purchase of substantially all
of the Devices & Services business, and EUR 1.65 billion relates to the
mutual patent agreement and future option.
Additionally, Microsoft will become a strategic licensee of the HERE
platform, and will separately pay Nokia for a four year license. This
revenue stream is expected to substantially replace the revenue stream
HERE is currently receiving from Nokia’s Devices & Services business
internally. If the transaction closes Microsoft is expected to become
one of the top three customers of HERE.
Nokia expects to book a gain on sale of approximately EUR 3.2 billion,
and expects the transaction to be significantly accretive to
earnings.The transaction is expected to close in the first quarter of
2014, subject to approval by Nokia shareholders, regulatory approvals
and other customary closing conditions.
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. At
closing, this transaction is expected to strengthen Nokia’s financial
position and provide a solid basis for future investment in these three
businesses.
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With care and regards,
Kannan ...
Skype: kankale63
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