Nokia today completed the sale of its handset business to software giant Microsoft, keeping the Chennai manufacturing plant, one of its largest facilities, out of the deal.
The Finnish handset maker expects the value of the transaction, which was completed after a month's delay, to be slightly higher than the earlier announced 5.44 billion euros (about USD 7.2 billion) after final adjustments based on the verified closing balance sheet, Nokia said in a statement. The firm had agreed to sell almost all of its Devices and Services (D&S) business to Microsoft in September.
Welcoming the completion of the deal, Microsoft Chief Executive Officer Satya Nadella reiterated the focus of the Redmond-headquartered firm on a "mobile-first, cloud-first world," according to a statement from the US company.
"With the Nokia mobile phone business, Microsoft will target the affordable mobile devices market, a USD 50 billion annual opportunity," it said. Nokia said the Chennai manufacturing plant will manufacture devices for Microsoft under a service agreement.
"In India, our manufacturing facility is subject to an asset freeze by the Indian tax authorities as a result of ongoing tax proceedings. Consequently, the facility remains part of Nokia following the closing of the transaction. Nokia and Microsoft have entered into a service agreement whereby Nokia would produce mobile devices for Microsoft," it said. The deal also excludes Nokia's plant in Masan, South Korea, which has about 200 employees and will be closed.
"Amid the uncertainty for our employees in Chennai and because of the planned closure of our facility in Masan, Nokia plans to offer a programme of support, including financial assistance, which would give our employees the chance to explore opportunities outside Nokia starting from a sound financial base.
"The company plans to bring to Chennai and Masan elements of its Bridge program, which we have made available for employees affected by company changes in other sites," the firm added.
"Today we welcome the Nokia Devices and Services business to our family. The mobile capabilities and assets they bring will advance our transformation," Nadella said.
"Together with our partners, we remain focused on delivering innovation more rapidly in our mobile-first, cloud-first world." Former Nokia President and CEO Stephen Elop will serve as Executive Vice President of Microsoft Devices Group and report to Nadella. Elop will oversee an expanded devices business that includes Lumia smartphones and tablets, Nokia mobile phones, Xbox hardware, Surface, Perceptive Pixel (PPI) products and accessories.
Microsoft will honour all Nokia customer warranties for existing devices, beginning April 25. It will absorb about 25,000 employees, who will be transferred globally from Nokia. On the amount of the transaction, Nokia said: "The estimate of adjustments made for net working capital and cash earnings was slightly positive for Nokia and we currently expect the total transaction price to be slightly higher than the earlier-announced transaction price of EUR 5.44 billion after the final adjustments are made based on the verified closing balance sheet."
Convertible bonds issued by Nokia to Microsoft after the transaction was announced have been redeemed and netted against the deal proceeds by the amount of principal and accrued interest, Nokia said.
Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen and Chris Weber have stepped down from the Nokia Leadership Team from today and till further notice, Nokia's interim governance model announced on September 3 is in place. Microsoft said: "As with any multinational agreement of this size, scale and complexity, Microsoft and Nokia have made adjustments to the deal throughout the close preparation process." Microsoft will not acquire the factory in South Korea and the factory in Chennai will stay with Nokia due to the tax liens on Nokia's assets that prevent transfer, it added.
According to reports, Nokia may name India-born Rajeev Suri as its next CEO and outline a new strategy focussed on network equipment business on April 29. Suri, 46, currently heads the telecom equipment business.