The deal would provide Microsoft Corp access to Nokia’s smartphones and its design team as the software giant struggles to compete against world-known companies after missing the mobile revolution.
Steve Ballmer, who has recentlu annouced his decision to retire from Microsoft after 30 years of work, said: “It’s a bold step into the future — a win-win for employees, shareholders and consumers of both companies.”
“Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services,” he added.
The deal will become Microsoft’s first big play since its SEO’s departure was announced a few weeks ago. By the way, former Microsoft chief executive is predicted to replace Ballmer at the software giant.
Nokia was used to be at the top of the mobile market with its virtually indestructible handsets. However, the Finnish company was quite slow to develop smartphones and lost the battle field to Apple and other market giants like Samsung and HTC.
Mr Elop, who joined the company three years ago, famously compared Nokia to a man on a burning oil platform who had no choice but to leave it.
The move could turn Microsoft from the laggard of the smartphone industry into a power player with the potential to close in on Apple and Google.
Under the deal, the software company will pay €3.79bn to buy Nokia’s Devices & Services business, and €1.65bn to license Nokia’s patents for 10 years, reports The Telegraph.
Under his leadership, the smartphone maker struck a deal to join forces with Microsoft to produce the Lumia series of smartphones, running Microsoft’s Windows operating system.
Microsoft believes that the acquiry would enable the company “to build on its 2011 partnership with Nokia and increase its share of the smartphone and tablet market through faster innovation.”
Under the terms of the upcoming deal Microsoft will also purchase the Asha brand and will license the Nokia brand for use with current Nokia mobile phone products.
“This element provides Microsoft with the opportunity to extend its service offerings to a far wider group around the world while allowing Nokia’s mobile phones to serve as an on-ramp to Windows Phone,” Microsoft said in a statement.
Around 32,000 Nokia employees will be transfered to Microsoft, including 4,700 people in Finland and 18,300 employees involved in manufacturing, assembly and packaging of products worldwide.
The billion deal will strengthen the company’s finances and give is capital to invest in the businesses.
Risto Siilasmaa, the Nokia chairman and who will also be interim chief executive, said: “After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders.”
Share in Nokia increased from 46pc to €4.6 in early trading on Tuesday. The share, which has increased 80pc in the past year, were trading at €16 five years ago.