By Sven Grundberg and Juhana Rossi
HELSINKI-- Nokia Corp. and Microsoft Corp. expect to formally
conclude the transfer of Nokia's phone business on Friday, April
25, putting an end to months of wrangling with regulators across
the globe.
The EUR5.4 billion deal, announced last September, was
originally slated to conclude by the end of March this year, but
was delayed due to lacking regulatory clearances from several Asian
countries.
It is still unclear if Nokia's major handset factory in India
will be included in the deal, or if the handover of that asset will
be delayed due to a long-running tax dispute between Nokia and tax
officials there.
Earlier this month, the transaction received a green light from
Chinese regulators, one of the key final hurdles to complete the
transaction. The deal is "now subject only to certain customary
closing conditions," Nokia said in a news release Monday.
The closing will allow the Finnish company to jettison its
unprofitable handset business that once dominated the global
mobile-device industry, and let Microsoft compete directly in the
fast growing smartphone business against Apple Inc., Samsung
Electronics Co. and other players.
Nokia and Microsoft have several adjustments to the original
terms of the transaction, Microsoft's General Counsel Brad Smith
wrote in a post on the company's official blog on Monday, citing
the "size, scale and complexity" of Microsoft's acquisition.
Most notably, Microsoft won't be taking over a smaller Nokia
manufacturing facility in Masan, South Korea, which is involved in
production of Nokia's smartphones. Microsoft requested a change in
the transaction to exclude the 200-employee factory "due to excess
capacity, " a Nokia spokesman said.
Nokia is in the process of evaluating its options with regards
to the future of the facility, the spokesman said.
In addition, Mr. Smith said Microsoft will be managing the
www.nokia.com Internet domain, as well as Nokia social media
operations for up to a year following the closure of the deal. It
will also be taking over 21 mobile phone researchers at Nokia's
Chief Technology Office in China, who in the original deal were set
to remain with Nokia.
Nokia and Microsoft haven't received approval from the South
Korean regulator for the deal, a person familiar with the situation
said. However, receiving approval from South Korean regulators
isn't considered necessary to close the transaction, this person
added.
While regulatory hurdles have been essentially cleared, it is
unknown if Nokia's massive 8,000-employee phone factory in India's
Tamil Nadu state will be transferred to Microsoft. Nokia is locked
in a dispute with tax authorities in India, and could be forced to
keep the phone factory and remain as a contract manufacturer for
Microsoft under a transitional period, unless the dispute is
resolved within the next few days.
"The situation [in India] is a complicated one, and Nokia is
continuing to weigh its options," Nokia said in a statement. "As
there is still time before the closing of the deal, we cannot
speculate on possible outcomes at this point."
After closing the sale of its handset business, Nokia is
expected to name its new chief executive to succeed Nokia's former
CEO Stephen Elop who will join Microsoft. Rajeev Suri, who
currently leads Nokia's mobile network business, and engineered its
successful turnaround, is widely expected to become the new
CEO.
Nokia is also expected to announce what it plans to do with what
its Chief Financial Officer Timo Ihamuotila has called "excess
cash" it gains from selling the handset business.
According to analysts' estimates compiled by the Swedish agency
SME Direkt in early April, Nokia could pay EUR2.5 billion in
dividends of its 2013 earnings. That would translate to a dividend
payout of EUR0.60 per share. Nokia hasn't confirmed any specific
details about payouts to date.
Write to Sven Grundberg at sven.grundberg@wsj.com and Juhana
Rossi at juhana.rossi@wsj.com
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