Microsoft to buy Nokia's mobile phone business for $7.2 billion cash
Steve Ballmer
REDMOND, Wash. -- In a major announcement, Microsoft Corp. said it will purchase Nokia's Devices & Services business, license Nokia's patents and license and use Nokia's mapping services for $7.17 billion in cash.
Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion -- or $7.17 billion U.S. at Monday's currency rate.
Microsoft will draw upon its overseas cash resources to fund the transaction.
"Today marks a moment of reinvention," Microsoft CEO Steve Balmer and Nokia CEO Stephen Elop said in an open letter to Microsoft employees on the corporation's blog. "Building on this successful partnership (with Nokia), we announced some important news today: An agreement for Microsoft to purchase Nokia’s Devices & Services business, to deliver more choices, faster innovation, and even more exciting devices and services to our customers.
"Today's agreement will accelerate the momentum of Nokia's devices and services, bringing the world's most innovative smartphones to more people, while continuing to connect the next billion people with Nokia's phone portfolio.
With the commitment and resources of Microsoft to take Nokia's devices and services forward, we can now realize the full potential of the Windows ecosystem, providing the most compelling experiences for people at home, at work and everywhere in between.
"We will continue to build the mobile phones you've come to love, while investing in the future -- new phones and services that combine the best of Microsoft and the best of Nokia ... together we will redefine the boundaries of mobility."
In a news release announcing the agreement, Microsoft said it "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’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies," Ballmer said in the news release. "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. 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.”
“We are excited and honored to be bringing Nokia’s incredible people, technologies and assets into our Microsoft family. Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution,” Ballmer said. “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.”
The transaction for a total of $5.44 billion EUR in cash -- or $7.17 billion in U.S. cash -- is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.