Microsoft has just announced it will buy most of Nokia’s devices and services business for EUR3.79 billion ($5 billion) and will spend a further EUR1.65 billion ($2.2 billion) to license Nokia’s patents — making a total cost of EUR5.44 billion ($7.2 billion) which will be paid out in cash.
The transaction is expected to close in the first quarter of 2014.
After the transaction goes through, several Nokia executives will transfer to Microsoft, including Nokia CEO Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber.
This means that Elop will be stepping down as Nokia CEO and take on the role of Executive VP of Devices & Services, as noted by Engadget.
Microsoft notes that purchasing Nokia’s devices and services business, as well as its patents, is key to “furthering the company’s transition to a devices and services company”. It will build on the partnership with Nokia announced in February 2011 that saw a series of Nokia’s Lumia smartphones being released.
With this move, Microsoft says it aims to accelerate the growth of its move into mobile devices via faster innovation, increased synergies, and unified branding and marketing. Microsoft CEO Steve Ballmer says:
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.
In a statement, Nokia said it plans to focus on three of its other businesses: network infrastructure and services, mapping and location services, as well as technology development.
Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following today’s announcement, also Nokia interim CEO, said:
After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders.
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