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Microsoft’s $7.2BN Acquisition Of Nokia’s Devices Business Is Now Complete

TechCrunch TechCrunch 25/04/2014 Natasha Lomas

Microsoft’s $7.2 billion acquisition of Nokia’s devices and services business has been completed. Nokia confirmed the completed transaction in a , noting that it has “completed the sale of substantially all of its Devices & Services business to Microsoft” (using the same phrasing it has deployed throughout the process).

Nokia said it expects the final price-tag to be slightly higher than the original figure of €5.44 billion  given when the deal was announced  due to the transaction being “subject to potential purchase price adjustments”:

The estimate of the adjustments made for net working capital and cash earnings was slightly positive for Nokia, and we currently expect the total transaction price to be slightly higher than the earlier-announced transaction price of EUR 5.44 billion after the final adjustments are made based on the verified closing balance sheet.

Another adjustment is to the terms, with Nokia’s manufacturing facilities in Chennai in India and Masan in Korea not transferring to Microsoft. Nokia has been facing ongoing tax proceedings in India which was presumably holding up the deal — hence the workaround, with Nokia noting that it has entered into a service agreement with Microsoft to produce mobile devices for Microsoft. (Some small irony there then, that Nokia is not technically getting out of mobile-making altogether.)

The release notes that the Korean facility will be closed by Nokia, with the loss of 200 jobs. But Nokia said it plans to extend its Bridge Program — which gives support to employees who leave the company to set up their own businesses — to staff in Chennai and Masan.

Amid the uncertainty for our employees in Chennai and because of the planned closure of our facility in Masan, Nokia plans to offer a program of support, including financial assistance which would give our employees the chance to explore opportunities outside Nokia starting from a sound financial base. The company plans to bring to Chennai and Masan elements of its Bridge program, which we have made available for employees affected by company changes in other sites.

The transaction’s closing had been delayed slightly by regulatory hold ups. The two companies had originally said they expected the deal to close in Q1– but bumped that time-frame up to April, saying they were still pending approvals in certain markets.

The deal got the green light in China , although the Chinese Ministry of Commerce did have some concerns about how Microsoft’s patent licensing practices might change post-acquisition. And required the company to agree to a list of patent-related commitments to grant approval.

Developing…  

Nokia’s full press release follows below:

Nokia Corporation
Stock exchange release
April 25, 2014 at 13.55 (CET +1)

Espoo, Finland – Nokia today announced that it has completed the sale of substantially all of its Devices & Services business to Microsoft.

The transaction, which also includes an agreement to license patents to Microsoft, was originally announced on September 3, 2013.

As earlier communicated, the transaction was subject to potential purchase price adjustments. The estimate of the adjustments made for net working capital and cash earnings was slightly positive for Nokia, and we currently expect the total transaction price to be slightly higher than the earlier-announced transaction price of EUR 5.44 billion after the final adjustments are made based on the verified closing balance sheet.

Additionally, as is customary for transactions of this size, scale and complexity, Nokia and Microsoft made certain adjustments to the scope of the assets originally planned to transfer. These adjustments included Nokia’s manufacturing facilities in Chennai in India and Masan in the Republic of Korea not transferring to Microsoft. These adjustments have no impact on the material deal terms of the transaction and Nokia will be materially compensated for any retained liabilities.

In India, our manufacturing facility is subject to an asset freeze by the Indian tax authorities as a result of ongoing tax proceedings. Consequently, the facility remains part of Nokia following the closing of the transaction. Nokia and Microsoft have entered into a service agreement whereby Nokia would produce mobile devices for Microsoft.

In Korea, Nokia and Microsoft agreed to exclude the Masan facility from the scope of the transaction. Nokia will now take steps to close the facility, which employs approximately 200 people.

Amid the uncertainty for our employees in Chennai and because of the planned closure of our facility in Masan, Nokia plans to offer a program of support, including financial assistance which would give our employees the chance to explore opportunities outside Nokia starting from a sound financial base. The company plans to bring to Chennai and Masan elements of its Bridge program, which we have made available for employees affected by company changes in other sites.

The convertible bonds issued by Nokia to Microsoft following the announcement of the transaction have been redeemed and netted against the deal proceeds by the amount of principal and accrued interest.

As previously announced, the following Nokia leaders have stepped down from the Nokia Leadership Team and transferred to Microsoft at closing, effective April 25, 2014: Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber. Until further notice, Nokia’s interim governance model announced on September 3, 2013 is in place.

Nokia plans to cover in further detail aspects of the closing of the transaction in conjunction with its first quarter 2014 results announcement on April 29, 2014.

Now that the closing of this transaction has taken place, Nokia is arranging a Board of Directors meeting for early next week in relation to its strategy assessment which was originally disclosed on September 3, 2013.

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