Microsoft and Nokia log on for new deal

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Microsoft (NASDAQ:MSFT) and Nokia (NYSE:NOK) have jointly announced that Microsoft will purchase the vast majority of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services as part of a deal worth 5.4bn euros ($7.2bn; £4.6bn).

© Image copyright erkkap

Under the terms of the agreement, Microsoft will pay 3.79bn euros to purchase substantially all of Nokia’s Devices & Services business, and 1.65bn euros to license Nokia’s patents in cash.

The news is the second major telecommunications deal in as many days, with Vodafone (LSE:VOD) striking a deal with Verizon Wireless yesterday.

“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.”

In a statement Microsoft said it 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.

The announcement builds on the partnership between the two tech giants that began in February 2011 with the launch 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.

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