The deal was years in the making but it finally happened: Microsoft will acquire Nokia’s devices and services business and license its patents for 10 years in a deal worth $7.2 billion. Rumors have swirled for years as the two giants repeatedly held negotiations, and the deal seemed like it would never happen since the companies’ recent Windows Phone partnership appeared to make a full acquisition pretty unnecessary from Microsoft’s perspective. Some argue it’s still unnecessary from Microsoft’s perspective, but the deal is done nonetheless — pending regulatory approval, of course. Microsoft shares fell 2.4% in pre-market trading on Tuesday morning while Nokia’s stock shot up more than 40%.
“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 exiting Microsoft CEO Steve Ballmer. “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.”
So much for the Surface phone.
Microsoft’s full press release follows below.
Media alert: Microsoft to acquire Nokia’s Devices & Services business, license Nokia’s patents and mapping services
Company to hold investor call; members of the media invited to attend.
REDMOND, Wash. — Sept. 3, 2013 — Microsoft Corp. and Nokia Corp. today announced that the boards of directors for both companies have decided to enter into a transaction whereby Microsoft will purchase substantially all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services.
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 cost of EUR 5.44 billion in cash. Microsoft will draw upon its overseas cash resources to fund the transaction. The transaction is expected to close in the first quarter of 2014, subject to approval by Nokia’s shareholders, regulatory approvals and other closing conditions.
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.
Microsoft has published a document summarizing the strategic rationale for the agreement athttp://www.microsoft.com/en-us/news/Press/2013/Sep13/StrategicRationale.aspx.
“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.”
“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 fiscal year 2015, and we see significant long-term revenue and profit opportunities for our shareholders.”
