Microsoft buys Nokia mobile business for £4.6bn

03/09/2013

Microsoft has bought Nokia's mobile phone business for 5.4bn euros (£4.6bn), giving the software giant a boost in its battle with Google, Samsung and Apple in the growing smartphone and tablet sector.

The deal will see Nokia license its patents and mapping services to Microsoft, and is set to be completed in early 2014, when about 32,000 Nokia employees will transfer to Microsoft.

Nokia's Lumia phones already run on Microsoft’s Windows software and the deal could help unite the hardware and software to boost integration.

Microsoft has also agreed a 10-year licensing arrangement with Nokia to use the Nokia brand on current mobile phone products.

The transaction is subject to approval by Nokia shareholders and regulators.

"It's a bold step into the future - a win-win for employees, shareholders and consumers of both companies," Steve Ballmer, exiting chief executive of Microsoft, said in a statement.

Management shake-up

Another result of the deal will be that Stephen Elop, Nokia's chief executive, returns to Microsoft just three years after he left.

The move makes Elop a favourite to replace Steve Ballmer bearing in mind the Microsoft boss has pledged to stand down within 12 months.

Elop will step down as president and chief executive of Nokia Corporation and resign from the company's board. He will now become the executive vice president of the Devices & Services unit, adding that it expected him to "transfer to Microsoft at the anticipated closing" of the deal.

Nokia was once a leader in mobile phones, but the firm's sales fell 24% in the three months to the end of June from a year earlier. It sold 53.7 million mobile phones during the quarter, down 27% on last year.

Nokia is still the world's No. 2 mobile phone maker behind Samsung, but it is not in the top five in the more lucrative and faster-growing smartphone market.

Nokia to focus on technology

Nokia shares jumped 45% on news of the deal.

Nokia said that once the sale is completed, it will concentrate on three key businesses - network equipment manufacturing, mapping and location services, and the development and licensing of technology.

Earlier this year, it agreed to buy Siemens' 50% stake in their joint venture, Nokia Siemens Networks (NSN), which makes telecoms network equipment, for 1.7bn euros.

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