Nokia has bought the entire 50% share of its partner Siemens in the joint venture Nokia Siemens Network for €1.7 Billion. The acquisition has been approved by the Board of Directors of Nokia as well as the Managing and Supervisory Boards of Siemens, and is subject to the customary regulatory approval process.
Upon closing of the planned acquisition, Nokia Siemens Networks will become a wholly owned subsidiary of Nokia. The transaction is expected to close during the third calendar quarter of 2013.
Nokia Siemens Networks was established in 2007, as a joint venture combining Nokia’s Networks Business Group and Siemens’ carrier-related operations for fixed and mobile networks. Nokia Siemens provide Telecommunications infrastructure and Network deployment services in more than 150 countries including Pakistan.
In the recent years, it was becoming an unprofitable venture due to the tough competition with Huawei and ZTE, and both Nokia & Siemens tried to sell the company. However company later opted for cost cutting initiatives and slashed more than 17,000 jobs, which significantly increased the profits. Nokia Siemens Network posted a profit of €899 million during the first quarter of 2013.
The purchase price totals EUR 1.7 billion, of which EUR 1.2 billion will be paid in cash at the closing of the transaction. The balance of 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 cash portion.