3 September 2013
Microsoft to acquire Nokia devices and services for £4.6 billion
As software company Microsoft continues it search for a new CEO, it builds upon the relationship with Nokia by acquiring its devices and services business for 5.4bn Euros ($7.2bn; £4.6bn).
Microsoft is to also license patents and use Nokia's mapping services. It will purchase Nokia's devices and services business for EUR 3.79 billion and invest an additional EUR 1.65 billion to license Nokia's patents - a total transaction cost of EUR 5.44 billion in cash. The deal is subject to regulatory approvals, other closing conditions that include Nokia's shareholders agreement.
Steve Ballmer, Microsoft CEO who announced leaving the firm within the next 12-months last week commented, "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."
To fund the transaction, Microsoft will use its overseas cash resources, a deal anticipated to be finalised in the first quarter of 2014, in which some 32,000 Nokia employees will move to Microsoft.
Microsoft to acquire Nokia Devices & Services: http://t.co/wZHhgLvvyJ— Microsoft (@Microsoft) September 3, 2013
Finnish-based Nokia was once a popular mobile market leader, but failed to innovate which allowed Apple, Samsung and others to wrestle away its market share. Whereas, Ballmer has taken criticism for not allowing Microsoft to embrace mobile, leaving it exposed to the aforementioned technology competitors. It’s a more fierce mobile market than ever before, seeing BlackBerry (formerly known as RIM) looking for a buyer as it also faces very similar challenges and sees HTC sales decline. The competition is set to intensify with strong competition from China from patient slow-burn firms such as Huawei building cheaper and more comparable devices.
The BBC reports Nokia’s sales fell 24% in the three months to the end of June from a year earlier. Sales were down 27% on last year as it sold 53.7 million mobile phones during the quarter. Although sales have declined the performance of its Lumina range on the Windows platform has been positive with worldwide sales hitting a record 7.4 million in Q2 reports The Verge.
Microsoft has published a document entitled ‘Accelerating Growth’ that summarises the strategic rationale for the agreement by the technology company, whihc available on its website ahead of conference call for media later today.
The announcement comes as other firms release details of their mobiles, smartphones, tablets and wearable technology offerings at Berlin technology conference IFA. With announcements from Apple waiting in the wings on its new operating system and new hardware, it remains to be seen which company will walk away this year in the strongest position.
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