Nokia Share Price Jumps on Deal with Microsoft

on Sep 3, 2013
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iNVEZZ.com Tuesday, September 3rd: Shares in Nokia Corp. (HEL:NOK1V) today soared almost 50 percent at the opening bell in Helsinki after the phone maker announced that it had signed an agreement to sell its Devices & Services business and license its patents to Microsoft Corp. (NASDAQ:MSFT).

Under the terms of the deal, the U.S.-based software maker will pay €3.79 billion to buy “substantially all” of the Nokia business, which includes its smartphone operations, Nokia said in a news release late Monday night. Microsoft will also pay €1.65 billion to license Nokia’s patents, bringing the value of the deal to €5.44 billion.
Approximately 32,000 Nokia employees will join Microsoft as a result of the deal. Stephen Elop, the Chief

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Executive Officer of Nokia and a former Microsoft executive, will rejoin the software giant. The move will make him a potential successor to Steven Ballmer, who has said he will retire as Microsoft CEO within 12 months after a successor is found.
The transaction, subject to shareholder and regulatory approvals, is expected to close in the first quarter of 2014, Nokia revealed, adding that it expected to book a gain on sale of approximately €3.2 billion.

**Next Chapter**
The deal, which is the largest for a mobile phones manufacturer after Google’s purchase of Motorola’s handset unit completed in May 2012, changes the nature of both companies. Nokia is exiting from the mobile-phone business it once dominated, leaving it mainly as a mobile-network equipment maker, while Microsoft, which became the world’s largest software producer on the back of its Windows operating system, is pushing aggressively into hardware.

Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following the company’s latest announcement, also Nokia’s interim CEO, commented: “Today is an important moment of change and reinvention for Nokia and its employees. With our strong corporate identity, leading assets and talent, and from a position of renewed financial strength, we will build Nokia’s next chapter.”

!m[US Software Giant to Buy Finnish Phone Maker’s Devices & Services Business for €5.4bn ](/uploads/story/5250/thumbs/pic1_inline.jpg)
“For Microsoft, this is a bold step into the future,” CEO Ballmer commented in a note to employees. For Microsoft, there is also an attractive financial dimension to the deal. Because Nokia is based in Finland, Microsoft can use a portion of its foreign-held cash to pay for the acquisition, allowing it to avoid hefty taxes it would otherwise pay to bring the cash back to the U.S. Microsoft took a similar approach to its $8.5 billion deal to acquire Skype, the largest deal in its history.
Nokia’s share price jumped as much as 47 percent when the market opened in Helsinki this morning. By 08:20 BST the stock has shed some gains, trading 40 percent above its previous day’s closing level.
**As of 08:20 BST buy Nokia shares at €4.35.**
**As of 08:20 BST sell Nokia shares at €4.33.**
Prior the deal announcement yesterday, the Microsoft share price closed trading 0.45 percent down.
**As of 08:20 BST buy Microsoft shares at $33.51.**
**As of 08:20 BST sell Microsoft shares at $33.47.**

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