Finland’s Nokia is buying out its German partner from telecoms equipment joint venture Nokia Siemens Networks in a €1.7bn deal.
Nokia will pay €1.2bn in cash for Siemens’ entire 50% stake. The remaining €500m will be in the form of a secured…
Finland’s Nokia is buying out its German partner from telecoms equipment joint venture Nokia Siemens Networks in a €1.7bn deal.
Nokia will pay €1.2bn in cash for Siemens’ entire 50% stake. The remaining €500m will be in the form of a secured loan from Siemens due one year from closing, which the companies expect to take place later this summer.
TelecomFinance understands Nokia has a committed bank financing with JP Morgan for the deal’s cash portion.
The companies declined to comment on the financing.
The deal comes amid signs of a turnaround for NSN, which has been cutting costs while being buoyed by increasing demand for new mobile broadband infrastructure.
As its restructuring began to bear fruit, Siemens CFO Joe Kaeser sparked a wave of renewed sale rumours in March when he indicated his group was looking to exit this year.
Siemens had reportedly also approached private equity firms including TPG, Blackstone and KKR about a sale. The last time NSN was shopped to private equity was in 2011, with the owners being forced to inject €1bn of equity to keep the venture afloat after failing to find a buyer.
However, this time the JV saw a willing buyer in Nokia.
Nokia CEO Stephen Elop said: “With its clear strategic focus and strong leadership team, Nokia Siemens Networks has structurally improved its operational and financial performance.
“Furthermore, Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity.”
For Siemens, the sale enables it to focus on its core areas of energy management, industry and infrastructure as well as healthcare.
It has been moving away from the telecoms sector over the last decade, and NSN represented its last major investment in this market. However, the company still owns a 49% stake in another telecoms-related JV called Siemens Enterprise Communications, which it shares with US private equity firm Gores.
Nokia has yet to decide on a new name for the business, which was established on 1 April 2007 and claims to have supplied products to more than 150 countries across the world.
Although it will continue to be headquartered in Espoo, Finland, Nokia said the business will have a strong regional presence in Germany through its major hub in Munich. NSN’s management will also remain in place.
