Nokia closes sale of its device and services business to Microsoft
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Credit: Nokia

The deal between the Finnish tech company and Microsoft is valued at more than €5.44 billion. Nokia also issued bonds in accordance with the sale, that allow Microsoft of acquire up to 8.9% of Nokia

Credit: Nokia

Credit: Nokia

Nokia has sold its devices and services business to Microsoft in a deal valued at more than €5.44 billion.

The transaction closed on April 25, although it was first announced on Sept. 3, 2013. At the time, the price was valued at €5.44 billion, but a recent statement said the adjustments for net working capital and cash earnings was slightly positive for Nokia, so the price is expected to be higher. Other aspects of the deal were also slightly changed, including the treatment of Nokia’s manufacturing facilities in Chennai, India, and in Masan, Republic of Korea.

These assets were originally to be transferred to Microsoft, but the Chennai facility is subject to an asset freeze by the Indian tax authorities due to the deal so it will remain under Nokia’s ownership while producing mobile devices for Microsoft. On the other hand, the Masan facility, which employs 200 people, will be closed and excluded from the deal.

Bond financing

In connection with the deal, the Espoo, Finland, company issued three €500 million series of bonds to Microsoft that mature in five, six and seven years, respectively. The tranches accrue interest at 1.125%, 2.5% and 3.625%, respectively. Microsoft agreed to provide the financing whether or not the deal closed, but agreed not to sell the bonds unless the deal failed to close. The bonds could be converted into a maximum of 8.9% of Nokia, although Microsoft only redeemed enough bonds to hold less than 5% of the company along with the sale closing, according to statements.

On Tuesday, April 29, Nokia will release its first quarter 2014 results, which may include more details on the transaction.

Nokia is a developer of infrastructure, location-based technologies and advanced technologies. Its main businesses include infrastructure business Nokia Solutions and Networks; mapping service HERE; and its technology development and intellectual property rights activities. The company has about 55,000 employees worldwide and invested more than €2.5 billion in R&D in 2013.

 

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Aviva Gat

About Aviva Gat


Olah Chadasha and former finance reporter from New York City. Gat is a writer, runner and traveler who came to Israel for the good food and weather. She writes for Geektime’s English and global desk.

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