Microsoft Buys A Large Stake in Nokia For $7.2B

By Vinayak on Monday, September 9, 2013 with 0 comments

The dramatic saga between Nokia (NOK) and Microsoft (MSFT) is finally coming to a close, with Microsoft announcing late Monday night that they will be purchasing Nokia's most well known business, and license their patents and mapping services, for $7.2 Billion. Microsoft will pay $5.0 billion for Nokia's mobile handset unit, and $2.2 billion to license Nokia's patents and mapping services.
The news comes after a week fueled with speculation of who would be replacing Microsoft's departing CEO, Steve Ballmer. While Nokia has put up a respectable fight in the smart phone war, and has managed to claw back at its competitors and remain more relevant than BlackBerry (BBRY), it seems that a major motive behind Microsoft's acquisition of Nokia is due to the man in charge, Stephen Elop. Elop is now, without a doubt, the next CEO of Microsoft. Period. Expect those 5 to 1 odds to increase soon.

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With Microsoft scrambling to find a new CEO, the synergies between Nokia's handset unit and Microsoft's Windows 8 ecosystem, and the previous experience and ripe age of Elop, it seems that Microsoft is willing to pay a pretty penny for only a piece of Nokia. Microsoft is paying roughly $1.35 per share for a handset division that has been struggling to post a profit for years, and nearly $1.95 per share for the whole deal. Keep in mind that before Tuesday's open, Nokia's market cap was around $14.45 billion, and their share price was $3.89. Nokia's mobile handset division is hardly reflected in these numbers, and it is interesting to see how the market will assess Microsoft's valuation of a business that many investors and analysts wrote off as dead.

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