Nokia's Stephen Elop and Microsoft's Steve Ballmer. (Credit: Microsoft)
Nokia’s Stephen Elop and Microsoft’s Steve Ballmer. (Credit: Microsoft)

Microsoft will pay nearly $7.2 billion for Nokia’s Devices and Services business, including its smartphone unit, in a landmark deal that promises to radically reshape the Redmond company’s own business.

Stephen Elop, the Nokia CEO and former Microsoft executive, is stepping down from his current role as part of the deal to become Nokia Executive Vice President of Devices & Services. The arrangement promises to fuel speculation about his prospects for becoming the next Microsoft CEO.

The deal, announced tonight, is the latest in a series of bombshell announcements from Microsoft, starting with the news that Microsoft CEO Steve Ballmer is stepping down from the company within 12 months, and followed by the company’s agreement to give activist investor ValueAct Capital an option for a seat on the Microsoft board.

More coverage: 

Here’s the news release issued by the companies tonight.

REDMOND, Washington and ESPOO, Finland – Sept. 2, 2013 – Microsoft Corporation and Nokia Corporation today announced that the Boards of Directors for both companies have decided to enter into a transaction whereby Microsoft will purchase substantially all of Nokia’s Devices & Services business, license Nokia’s patents, and license and use Nokia’s mapping services.

Under the terms of the agreement, Microsoft will pay EUR 3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and EUR 1.65 billion to license Nokia’s patents, for a total transaction price of EUR 5.44 billion in cash. Microsoft 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.

Building on the partnership with Nokia announced in February 2011 and the increasing success 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. For Nokia, this transaction is expected to be significantly accretive to earnings, strengthen its financial position, and provide a solid basis for future investment in its continuing businesses.

“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.”

“We are excited and honored to be bringing Nokia’s incredible people, technologies and assets into our Microsoft family. Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we anticipate a smooth transition and great execution,” Ballmer said. “With ongoing share growth and the synergies across marketing, branding and advertising, we expect this acquisition to be accretive to our adjusted earnings per share starting in FY15, and we see significant long-term revenue and profit opportunities for our shareholders.”

“For Nokia, this is an important moment of reinvention and from a position of financial strength, we can build our next chapter,” said Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following today’s announcement, Nokia Interim CEO. “After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders. Additionally, the deal offers future opportunities for many Nokia employees as part of a company with the strategy, financial resources and determination to succeed in the mobile space.”

“Building on our successful partnership, we can now bring together the best of Microsoft’s software engineering with the best of Nokia’s product engineering, award-winning design, and global sales, marketing and manufacturing,” said Stephen Elop, who following today’s announcement is stepping aside as Nokia President and CEO to become Nokia Executive Vice President of Devices & Services. “With this combination of talented people, we have the opportunity to accelerate the current momentum and cutting-edge innovation of both our smart devices and mobile phone products.”

Nokia has outlined its expected focus upon the closing of the transaction in a separate press release published today.

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  • Bad deal

    Hate to say, Bad Deal

  • Satish Shetty

    Good deal for Microsoft. Hope both companies talents (Microsoft’s software engineering & Nokia’s hardware design) put together in next generation mobile devices.

  • ChuksOnwuneme


  • MeP

    A once dominant mobile phone manufacture, that missed the smartphone market transition, acquired by a dominant desktop OS manufacturer that missed the mobile market transition. Sounds like a marriage made in heaven but not sure if produces anything beyond more 3rd place market share in a missed transition for both companies.

    I guess is makes it easier to make Elop the new CEO after Balmer steps down.

  • yuck

    Another innovative company (nokia) dies … just like MSFTs acquisition of Skype a few years back.

    Elop just fast forwarded to Ballmer’s replacement.

  • Guest

    Can’t wait to try the aQuantive Phone!

  • Ariel

    Can’t help but remember what happened when Danger was acquired. Sidekick, anyone? Anyone?!

    • Ryan Parrish

      Except that the Lumia range already comprise 85% of all Windows Phones, so the comparison doesn’t make sense. The quality of the phones isn’t the question here, they are good, it’s whether this will make a difference at all, and only time will tell.

  • clibou

    Steve Ballmer’s resignation timing makes more sense now.

  • Guest

    This is an excellent deal. I approve of it. Moving Microsoft directly into the ‘phone business is an excellent way to take the high-quality mobile experiences of Windows Phone and spread them to more consumers. Buying Nokia will also provide an entrepot into emerging markets such as Europe where consumers are often wary of large, monopolistic American powers.

    I approve of this deal. Thank you.

    • Guest

      Yeah, it’s an excellent deal. Except for the fact that this division is losing money and the majority of its business is in decline. Oh, and MS’s record on large acquisitions sucks. And it’s in the consumer hardware space, where MS’s record sucks even more. Then there’s the fact that for the past year the biggest inhibitor to success hasn’t been Nokia’s hardware but MS’s WP team, which hasn’t figured out it’s the distant number three player in a consumer market where industry leaders are refreshing their OS every 6-12 months, not the dominant provider in an enterprise market where it can afford to take years between releases. And of course it’s always smart to make a major acquisition and add 30,000 employees, most of them overseas, right when you’re doing a massive company-wide reorg and changing CEOs after thirteen years because your core businesses are being disrupted.

  • panacheart

    This will either be a bold new beginning, or the beginning of the end.

    • Guest

      The beginning of the end already occurred with iPad and the decline of Windows. So it’s either the former, or just a failed attempt at reversing the latter.

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