Microsoft has snapped up Nokia's devices and services business for 3.79 billion euro, and will pay 1.65 billion euro to license Nokia's patents for a total transaction price of 5.44 billion euro in cash. Steve Ballmer, Microsoft chief executive officer, said: "It's a bold step into the future, a win-win for employees, shareholders and consumers of both companies."
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.
For Nokia, this transaction is expected to be significantly accretive to earnings, strengthen its financial position, and provide a solid basis for future investment in its continuing businesses.
Ballmer added: "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 its 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.
"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 FY15, and we see significant long-term revenue and profit opportunities for our shareholders."
Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following today's announcement, Nokia Interim CEO. "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. Additionally, the deal offers future opportunities for many Nokia employees as part of a company with the strategy, financial resources and determination to succeed in the mobile space.
Stephen Elop, who following the acquisition is stepping aside as Nokia President and CEO to become Nokia Executive Vice President of Devices & Services, added: "Building on our successful partnership, we can now bring together the best of Microsoft's software engineering with the best of Nokia's product engineering, design, and global sales, marketing and manufacturing."
Chris Millington, UK & Ireland MD at Doro, gave an early reaction to the news: "My first reaction is wow -the mobile industry is capable of such incredible change. While this news is not a surprise, it does mean that Microsoft will now have the platform to deliver its mobile strategy.
"For business users specifically, this really does signal a significant opportunity, especially for Nokia's smartphone offering. However, does it mean the end of Nokia's feature phone business? Will future product development and focus now shift to Microsoft-only smart devices?"
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.