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Microsoft will acquire Nokia’s devices and services unit and license the company’s mapping services early this month in a deal worth $7.2 billion in a bid to bolster the company’s position in the smartphone market.
The software giant will pay $5 billion for “substantially all” of Nokia’s phone unit and another $2.2 billion to license its patents, the companies announced late Sunday. As part of the deal, Stephen Elop will step down as Nokia chief executive to become the executive vice president of the devices and services division. Elop, a former Microsoft executive, is one of a handful of candidates suggested to replace Microsoft Steve Ballmer, who is expected to retire by next summer.
The acquisition suggests that like Apple, Microsoft believes it needs more direct control of handset manufacturing to succeed in the smartphone market. The relationship between Microsoft and Nokia began in February 2011 when Elop, who had arrived at the beleaguered Finnish handset maker from Microsoft five months earlier, announced at a developer’s conference that Nokia was adopting Windows Phone 7 as its primary smartphone OS.
As part of the deal, Nokia will grant Microsoft a 10-year non-exclusive license to its patents, and Microsoft will grant Nokia reciprocal rights to use to its location-based patents.
The deal, which is expected to close in the first quarter of 2014, is still subject to shareholder and regulatory approval. When the deal closes, approximately 32,000 Nokia employees will transfer to Microsoft, including 4,700 in Finland and 18,300 involved in manufacturing.
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Source: Associated Press