ValueAct’s Jeffrey Ubben.

Microsoft’s conference call on its $7.2 billion Nokia Devices & Services acquisition just wrapped up, summarizing the key points of the deal, and the final question was one of the most intriguing: Did Microsoft inform ValueAct Capital about the impending acquisition before entering into the “cooperation agreement” with the activist shareholder last week?

“The answer is no,” said Microsoft general counsel Brad Smith, responding to the question from analyst Rick Sherlund of Nomura Securities. “You would not expect the company to disclose material, non-public information to an entity that doesn’t have an appropriate non-disclosure agreement, so the answer is no.”

It will be interesting to see how this affects the budding relationship between ValueAct and Microsoft. The companies announced a deal on Friday that gives ValueAct the option to put its president on the Microsoft board, the first time a major investor has gotten a foot in the door at Microsoft in this way.

ValueAct’s CEO Jeffrey Ubben said in a 2012 CNBC interview, “When we go on a board, it means we’re basically locking ourselves up, we’re getting married. We see a five-year opportunity to grow our capital 20 percent, and we think we can be partners with management.”


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  • Robby Andrews

    Now Stephen Elop is the heir apparent . Microsoft hasn’t been that commercially successful in hardware, besides Xbox 360 and input devices of course. However with a new CFO, CEO on the way, and this acquisition, let’s see if Microsoft really can be different.

    • Guest

      Yeah, it would be suicidal to expect anyone else to come up to speed on MS, the pending major reorg, and Nokia’s phone business all while under the gun of Google and Apple. Not the ideal long term choice. But maybe Mr Right Now.

  • Guest

    One would assume they had at least discussed similar moves in broad strokes during their various meetings with VA. Otherwise, they’re going to have one pissed off new board member.

  • Bob

    Trust Ballmer to end his failed CEO run with what’s likely his stupidest deal yet. For $7.2 billion he bought a business that loses money. He didn’t even end up with Nokia’s patent portfolio as part of that, which is about the only way it could have made financial sense longer term. MS shareholders are out almost $30 billion in market cap since the deal was announced. And they’re out the $7.2 that could have gone to dividends or buybacks. And we all know integration and other costs will add billions more to that total, which already doesn’t include the HERE licensing costs. And worst of all, an already bloated MS adds another 30K employees and $15 billion a year in incremental op ex. Insanity.

    ValueAct is going to be furious about this development.

  • Mark

    If only we could have heard the phone call following this announcement. Would have been fun hearing Ballmer explain the rationale behind spending $7 billion only to immediately wipe out almost $30 billion of MS’s marketcap.

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