Nokia Buys Siemens Controlling 50% Stake For $2.2 Billion
Nokia recently confirmed that it bought out its German Partner, Nokia Siemens Network, who had a 50 percent stake in the company, for $2.2 billion ($1.7 Euros). Following the deal, NSN will be a wholly owned by Nokia and drop the Siemens name, with a new name and brand to be introduced in September. Its headquarters will remain in Finland.
Nokia and Siemens were combined in 2007 and have not had much of a track record since then, due to heavy competition from Chinese Huawei Technologies and Ericcson. With the launch of the Nokia Lumia range of smartphones , things seem to be looking up for Nokia. Over the course of the last year, though, Nokia has seen some inclination, due to a growing demand for mobile infrastructure in the U.S.
“With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance,” said Stephen Elop, the CEO of Nokia in a press release. “Furthermore, Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity.”
Insiders reported to Bloomberg that JPMorgan Chase &Co. is providing Nokia with financing for the transactions.
The deal will also help Siemens with its goals, too, as it shifts its focus on its more profitable areas in the energy and healthcare markets.
“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,” said Joe Kaeser, CFO at Siemens.
According to an official press release, there will be a remaining balance of slightly over $6.5 million, which will be paid in the form of a secure loan to be paid over the course of a year.
“This purchase will be very attractive to Nokia’s shareholders,” said Elop.