Microsoft acquires “most of” Nokia for $7.2 Billion in a surprise move

Microsoft has announced that it plans to acquire Nokia’s devices and services business, as well as license its patents and mapping services in a $7.2 billion deal.

The transaction, expected to close in the first quarter of 2014 pending approval from Nokia’s shareholders, will be paid in cash. The Redmond, Wash. software giant will pay $5 billion to buy the devices and services division and $2.2 billion to license the patents.

Many analysts believe that Microsoft has made an intelligent move, killing two birds with one stone – By acquiring Nokia’s mobile business, Microsoft can now consolidate it’s mobile offerings in the market. But what’s more interesting is the role of Nokia’s current CEO Stephen Elop in the deal. 

Elop, who left Microsoft in 2010 to join Nokia, played a key role in Nokia-Microsoft tie-up two years back. After Microsoft’s CEO, Ballmer announced his upcoming retirement, the hunt for his successor is on and Stephen Elop seems to be the leading contender for the post.

Hiring back Elop from Nokia would have been quite a difficult move. Social media is abuzz with rumors of this move being an acqui-hire of Stephen Elop with Nokia being an add-on to the deal.  

In a release, Microsoft said it aims to increase its share and profits in the mobile-device market “through faster innovation, increased synergies and unified branding and marketing.” For its part, Nokia said the deal strengthens the company financially, and gives it an opportunity for reinvention.

Microsoft also published an email from CEO Steve Ballmer to company employees, describing the acquisition. His note, in part, reads as follows:

[quote_simple]”Our Windows Phone partnership over the past two and half years has yielded incredible work — the stunning Lumia 1020 is a great example. Our partnership has also yielded incredible growth. In fact, Nokia Windows Phones are the fastest-growing phones in the smartphone market.”[/quote_simple]

In 2011, Microsoft entered a partnership with Nokia, which adopted the Windows Phone operating system as its primary smartphone strategy. The agreement produced a range of phones, including the Lumia 920 and the Lumia 1020.

For the time being, Risto Siilasmaa will be Nokia’s interim CEO and continue to serve as chairman of the company’s board of directors. As part of the deal, key Nokia engineers are also joining Microsoft.

“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,” Elop said in a statement.

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