Nokia to assume full ownership of Nokia Siemens Networks

Nokia Corp. has agreed to buy Siemens AG’s 50% share in their Nokia Siemens Networks joint venture. The boards of both companies have approved the deal, which will see Nokia assume full ownership of the company for the price of EUR 1.7 billion.

The EUR 1.7 billion includes EUR 1.2 billion in cash paid at the closing of the transaction. The remaining 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 initial cash payment.

The transaction is expected to close during the third calendar quarter of 2013. Nokia says it plans to operate Nokia Siemens Networks as a wholly owned subsidiary.

The two firms created Nokia Siemens Networks on April 1, 2007. The joint venture produced equipment for both fixed and mobile networks. However, the joint venture struggled to achieve consistent profitability. The two companies sold the joint venture’s optical communications business to Marlin Equity Partners earlier this year. Marlin subsequently rebranded the business unit Coriant (see “Coriant unleashed as Marlin Equity Partners closes acquisition”) and rolled its newly acquired Sycamore Network Solutions business under it (see “Marlin brings Sycamore Network Solutions under Coriant”).

That transaction left Nokia Siemens Networks as a provider of mobile network infrastructure, which better complements Nokia’s mobile device business.

"With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance,” Stephen Elop, president and CEO of Nokia, commented. “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."

Added Joe Kaeser, Siemens CFO, "With this transaction, we continue our efforts to strengthen our focus on Siemens' core areas of energy management, industry, and infrastructure as well as healthcare. The full acquisition of Nokia Siemens Networks by Nokia offers an attractive opportunity to actively shape the telecom equipment market for the future and create sustainable value."

Nokia says it plans to retain the existing management and governance structure at Nokia Siemens Networks, with Rajeev Suri continuing as CEO and Jesper Ovesen continuing as executive chairman of the Nokia Siemens Networks board. Nokia Siemens Networks' 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. Nokia says it also supports the current management plan, including the in-progress restructuring plan.

However, the name will change. A new brand name will be announced upon the deal’s close.

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