Finnish based Nokia and Germany based Siemens AG today announced that they have entered into an agreement pursuant to which Nokia will acquire Siemens’ entire 50% stake in their joint venture, Nokia Siemens Networks. The acquisition has been approved by the Board of Directors of Nokia as well as the Managing and Supervisory Boards of Siemens, and is subject to the customary regulatory approval process.
While Nokia has been struggling to compete against Apple and Samsung in smartphones, the network gear maker Nokia Siemens Network(NSN) has been posting profits in the past few quarters. NSN turned profitable after massive cost cuts and as its focus on fourth-generation (4G) Long Term Evolution (LTE) networks has begun to pay off.
Stephen Elop, President and CEO of Nokia, commented: “With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance. Furthermore, Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity. Nokia is pleased with these developments and looks forward to continue supporting these efforts to create more shareholder value for the Nokia group.”
Nokia Siemens Networks was established on April 1, 2007, as a joint venture combining Nokia’s Networks Business Group and Siemens’ carrier-related operations for fixed and mobile networks. Nokia Siemens Networks has since become a leading global provider of telecommunications infrastructure, deploying networks that help people stay connected in more than 150 countries around the world. The company’s focus is in offering innovative mobile broadband technology and services.
Nokia plans to retain the existing management and governance structure at Nokia Siemens Networks, and operational headquarters will remain in Espoo, Finland, and the company will continue to have a strong regional presence in Germany, including its major hub in Munich.
In accordance with this transaction, the Siemens name will be phased out from Nokia Siemens Networks’ company name and branding. Nokia and Nokia Siemens Networks plan to confirm the new name and brand at the closing of the transaction.
The purchase price totals EUR 1.7 billion, of which EUR 1.2 billion will be paid in cash at the closing of the transaction. The balance of EUR 0.5 billion will be paid in the form of a secured loan from Siemens due one year from closing. Nokia has obtained committed bank financing for the EUR 1.2 billion cash portion. Nokia also said it estimated its net cash position was 3.7-4.2 billion euros at the end of the second quarter.
(With inputs from Reuters)