Skadden is representing Nokia Corporation on its agreement to enter into a transaction whereby Nokia will sell substantially all of its Devices & Services business and licence its patents to Microsoft for EUR 5.44 billion in cash. The transaction is expected to close in the first quarter of 2014. Following the transaction, Nokia plans to focus on its three established businesses: NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing.
The Skadden team includes corporate partners Kenton King (Palo Alto), Michael Mies (Palo Alto) and Danny Tricot (London), and counsel Jason Tomita (Palo Alto); intellectual property partner David Hansen (Palo Alto), of counsel James Brelsford (Palo Alto) and counsel Carrie Leroy (Palo Alto); tax partners Paul Oosterhuis (Washington D.C.) and Eric Sensenbrenner (Washington D.C.); executive compensation and benefits partner Joseph Yaffe (Palo Alto), of counsel Helena Derbyshire (London) and counsel Kristin Davis (Palo Alto); and antitrust partners Frederic Depoortere (Brussels), Steven Sunshine (Washington D.C.) and Alec Chang (New York), and counsel Giorgio Motta (Brussels).
At closing, this transaction is expected to strengthen Nokia's financial position and provide a solid basis for future investment in these three businesses.
"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," said Risto Siilasmaa, Chairman of the Nokia Board of Directors and, following the announcement, also Nokia interim CEO.
Deal Terms
Subject to the closing of the transaction, Microsoft will acquire substantially all of Nokia's Devices & Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities, and related support functions. At closing, approximately 32,000 people are expected to transfer to Microsoft, including approximately 4,700 people in Finland. Nokia's CTO (Chief Technology Office) organization and patent portfolio will remain within the Nokia Group. The operations that are planned to be transferred to Microsoft generated an estimated EUR 14.9 billion, or almost 50%, of Nokia's net sales for the full year 2012.
Building Nokia's next chapter
Following the transaction, Nokia plans to focus on its three established businesses, each of which is a leader in enabling mobility in its respective market segment: NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing.
Nokia will retain its headquarters in Finland. Excluding the approximately 32,000 people planned to transfer to Microsoft, Nokia would have employed approximately 56,000 people at the end of the second quarter 2013.
"Today is an important moment of change and reinvention for Nokia and its employees," said Nokia Chairman and interim CEO Mr. Siilasmaa. "With our strong corporate identity, leading assets and talent, and from a position of renewed financial strength, we will build Nokia's next chapter."
NSN, a wholly-owned business of Nokia since August 2013, is a leader in mobile broadband, and is focused on operating at the forefront of each generation of mobile technology, including pushing the boundaries of connecting people through LTE and future technologies. Nokia continues to manage NSN as a strong, independent entity.
HERE will continue to focus on growing its industry-leading position through a broad location offering across mobile devices, connected devices, enterprise solutions and the automotive environment. HERE will continue to execute its strategy to become the leading independent location cloud platform company, offering mapping and location services across different screens and operating systems.
Our Advanced Technologies business will build on several of Nokia's current CTO and Intellectual Property Rights activities.Advanced Technologies will explore new business opportunities through advanced research, development and concept products in areas such as connectivity, sensing and material technologies, as well as web and cloud technologies. At the same time, Advanced Technologies plans to continue to build Nokia's patent portfolio from this innovation and targets to expand its industry-leading technology licensing program, spanning technologies that enable mobility today and tomorrow.
"Following this transaction, Nokia's financial situation is expected to be significantly stronger and its earnings profile significantly improved," said Nokia CFO and interim President Timo Ihamuotila. "We will have three well-positioned businesses, each a leader in its market. Overall, we will continue to focus on managing and maximizing the assets of Nokia Group prudently and pragmatically to create value for Nokia shareholders."
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