Microsoft has finally put pen on paper and closed the deal on the acquisition of Finland phone manufacturer, Nokia.
Nokia announced they have “substantially” sold their Devices & Services department to the American tech giant. As expected, Nokia’s Chennai manufacturing plan in India wasn’t part of the deal even though it was included when Microsoft initially agreed to buy off the company for $7.2 billion.
Now, that means that Microsoft won’t be forking out $7.2 billion any longer. It is expected that the exclusion of the Chennai factory will cut off not less than $800 million from the total price of the transaction.
Another plant was.t included in the deal though. The plant is the Masan factory in South Korea which has been put up for closure.
Here is a press release from Nokia:
Nokia completes sale of substantially all of its Devices & Services business to Microsoft
Stock exchange release
April 25, 2014 at 13.55 (CET +1)
Espoo, Finland – Nokia today announced that it has completed the sale of substantially all of its Devices & Services business to Microsoft.
The transaction, which also includes an agreement to license patents to Microsoft, was originally announced on September 3, 2013.
As earlier communicated, the transaction was subject to potential purchase price adjustments. The estimate of the adjustments made for net working capital and cash earnings was slightly positive for Nokia, and we currently expect the total transaction price to be slightly higher than the earlier-announced transaction price of EUR 5.44 billion after the final adjustments are made based on the verified closing balance sheet.
Additionally, as is customary for transactions of this size, scale and complexity, Nokia and Microsoft made certain adjustments to the scope of the assets originally planned to transfer. These adjustments included Nokia’s manufacturing facilities in Chennai in India and Masan in the Republic of Korea not transferring to Microsoft. These adjustments have no impact on the material deal terms of the transaction and Nokia will be materially compensated for any retained liabilities.
In India, our manufacturing facility is subject to an asset freeze by the Indian tax authorities as a result of ongoing tax proceedings. Consequently, the facility remains part of Nokia following the closing of the transaction. Nokia and Microsoft have entered into a service agreement whereby Nokia would produce mobile devices for Microsoft.
In Korea, Nokia and Microsoft agreed to exclude the Masan facility from the scope of the transaction. Nokia will now take steps to close the facility, which employs approximately 200 people.
Amid the uncertainty for our employees in Chennai and because of the planned closure of our facility in Masan, Nokia plans to offer a program of support, including financial assistance which would give our employees the chance to explore opportunities outside Nokia starting from a sound financial base. The company plans to bring to Chennai and Masan elements of its Bridge program, which we have made available for employees affected by company changes in other sites.
The convertible bonds issued by Nokia to Microsoft following the announcement of the transaction have been redeemed and netted against the deal proceeds by the amount of principal and accrued interest.
As previously announced, the following Nokia leaders have stepped down from the Nokia Leadership Team and transferred to Microsoft at closing, effective April 25, 2014: Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber. Until further notice, Nokia’s interim governance model announced on September 3, 2013 is in place.
Nokia plans to cover in further detail aspects of the closing of the transaction in conjunction with its first quarter 2014 results announcement on April 29, 2014.
Now that the closing of this transaction has taken place, Nokia is arranging a Board of Directors meeting for early next week in relation to its strategy assessment which was originally disclosed on September 3, 2013.
It should be noted that Nokia and its business are exposed to various risks and uncertainties and certain statements herein that are not historical facts are forward-looking statements, including, without limitation, those regarding: A) purchase price adjustments related to the sale by Nokia of substantially all of Nokia’s Devices & Services business, including Smart Devices and Mobile Phones (referred to below as “Sale of the D&S Business”) pursuant to the Stock and Asset Purchase Agreement, dated as of September 2, 2013, between Nokia and Microsoft International Holdings B.V.; B) expectations with respect to production facilities; C) expectations, plans or benefits related to or caused by the Sale of the D&S Business; D) expectations, plans or benefits related to Nokia’s strategies, including plans for Nokia with respect to its continuing businesses that were not be divested in connection with the Sale of the D&S Business; E) expectations, plans or benefits related to changes in leadership and operational structure; F) expectations and targets regarding our operational priorities, financial performance or position, results of operations and use of proceeds from the Sale of the D&S Business; and G) statements preceded by “believe,” “expect,” “anticipate,” “foresee,” “sees,” “target,” “estimate,” “designed,” “aim”, “plans,” “intends,” “focus,” “will” or similar expressions. These statements are based on management’s best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors, including risks and uncertainties that could cause these differences include, but are not limited to: 1) our ability to effectively and smoothly implement planned changes to our leadership and operational structure or maintain an efficient interim governance structure and preserve or hire key personnel; 2) any negative effect from the implementation of the Sale of the D&S Business, including our internal reorganization in connection therewith; 3) disruption and dissatisfaction among employees caused by the Sale of the D&S Business; 4) the amount of the costs, fees, expenses and charges related to or triggered by the Sale of the D&S Business; 5) any impairments or charges to carrying values of assets or liabilities related to or triggered by the Sale of the D&S Business; 6) potential adverse effects on our business, properties or operations caused by us implementing the Sale of the D&S Business; 7) the initiation or outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against us relating to the Sale of the D&S Business, as well as the risk factors specified on pages 12-47 of Nokia’s annual report on Form 20-F for the year ended December 31, 2012 under Item 3D. “Risk Factors.” and risks outlined in our fourth quarter and full year 2013 results report available for instance at www.nokia.com/financials. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Nokia does not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.