Nokia (NYSE: NOK ) has entered into a definitive agreement with Siemens (NYSE: SI ) , its partner in Nokia Siemens Networks (NSN), to purchase the 50% stake in the joint venture it doesn't already own for $2.23 billion, the companies announced today.
The $2.23 billion price for the outstanding 50% ownership of Nokia Siemens Network will consist of $1.57 billion in cash due at closing, with $655 million due in one year. The secondary payment will be in the form of a secured loan from Siemens, the companies said. The $1.57 billion initial payment from Nokia will be made using a previously arranged bank financing package.
Nokia CEO Stephen Elop intends to retain the existing Nokia Siemens Networks executive management team. Elop said in a statement, "With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance."
The deal, which is expected to close the third calendar quarter of 2013, has been approved by the boards of both Nokia and Siemens and the unit will become a subsidiary of Nokia upon closing. Once the deal is consummated, the new subsidiary will be known as Nokia Networks. The transaction is subject to regulatory approval and customary closing conditions.
NSN was formed in 2007. Nokia Siemens Networks had been loss-making for several years amid speculation and rumors that it was an acquisition target. Recently, however, Nokia Siemens Networks has shown signs of improvement after restructuring and substantial job cuts, with a small first-quarter operating profit this year compared to a 1 billion euros loss in the same period in 2012.
-- Material from The Associated Press was used in this report.