The Wall Street Journal
Nokia Corp. signaled an end to its tie-up with Siemens AG, announcing a €1.7 billion ($2.21 billion) deal to buy its German partner out of the two companies’ telecom-equipment joint venture Nokia Siemens Networks.
Nokia will pay €1.2 billion in cash for Siemens’s 50% stake when the deal is completed in the third quarter. NSN will then become a wholly owned unit of Nokia, subject to regulatory approval. The balance of €500 million will be paid in the form of a secured loan from Siemens due a year later.
The deal underscores a change in fortunes for NSN, which was created in 2007 when the network businesses of Siemens and Nokia—not considered a major part either’s operations—were combined. NSN initially struggled to gain traction, bloated with high costs and too many staff in an industry dominated by Sweden’s Ericsson and cheaper equipment from Chinese rivals Huawei Technologies Co. and ZTE Corp. 000063.SZ -2.34% By the end of 2012, it had generated a cumulative reported operating loss of €5 billion, forcing Nokia and Siemens to inject €1 billion of fresh capital into the venture in 2011.