March 24, 2014
Microsoft Buyout Of Nokia Delayed
Peter Suciu for redOrbit.com - Your Universe Online
While it sounded like a “done deal,” Nokia has delayed the sale of its smartphone business to tech giant Microsoft until April after reports on Monday stated that Nokia had still not received approvals from certain antitrust authorities in Asia.
Last September, Microsoft announced its plans to acquire Nokia’s Devices & Services business, which included the smartphone and mobile phone parts of the Finnish-based handset maker, for more than $7 billion. The deal also reportedly included a number of licensing agreements and patents by Nokia to Microsoft. The deal was expected to close by the end of the first quarter of this year.
On Sunday Brad Smith, general counsel and executive vice president for legal and corporate affairs at Microsoft issued a statement via the company’s TechNet Blog.
“We are nearing the final stages of our global regulatory approval process – to date we have received approvals from regulatory authorities in 15 markets on five continents. Currently, we are awaiting approval confirmation in the final markets. This work has been progressing, and we expect to close next month, in April 2014,” Smith wrote. He added, “The completion of this acquisition will mark the first step to bring Microsoft and the Nokia Devices and Services business together. Our acquisition will accelerate our mobile-first, cloud-first imperatives. We’re looking forward to accelerating innovation and market adoption for Windows Phones and introducing the next billion customers to Microsoft services via Nokia mobile phones.”
The companies had received the thumbs up from regulators in the United States late last year. In December the Federal Trade Commission (FCC) signed off on Microsoft’s proposed acquisition of Nokia’s mobile devices and services business, following approval by the United States Department of Justice.
However, on Monday the Wall Street Journal reported that authorities in China hadn’t signed off on the plan. However, sources told the newspaper that both companies remain optimistic about the new timetable. There is also an outstanding issue of high-profile tax disputes in India that need to be factored in before the deal may close, but Nokia has reiterated that its tax dispute in India would not have an impact on the deal schedule.
This dispute was over unpaid sales tax on phones made at the factory in the state of Tamil Nadu. Nokia has contested the claim by authorities in that state at the local High Court, stating that no sales tax should be levied on exported products.
Indian authorities have otherwise approved of the acquisition. PC World reported that the Competition Commission of India had approved the deal in October, “as it found that the combination of the two companies will not likely have an ‘appreciable adverse effect’ on competition in the country.”
In addition, the WSJ reported that this new timetable could delay Nokia’s planned announcement for its new strategy and how it will compete in the wireless networks industry. Nokia is expected to announce its new strategic changes as well as a new chief executive in the coming days. Nokia’s chairman is acting as chief executive, while outgoing chief Stephen Elop is heading to Microsoft.
Elop will head up Microsoft’s expanding hardware business and report to the company’s new chief executive Satya Nadella.
Reuters also reported that other tech firms – including Google and Samsung Electronics – have asked the Chinese regulators to ensure that the deal would not lead to higher licensing fees.
While this may not stop the deal, Reuters reported that even a delay could be a problem for the firms.
“(The delay) is a bad sign. They have been discussing with authorities for quite a while already, and they still need more time,” Nordea Markets analyst Sami Sarkamies told Reuters on Monday. “The biggest risk is in the upside of their patents. It looks like Nokia will have to make bigger concessions to push the deal through.”
The two companies had been close partners since February 2011, when Nokia agreed to focus its attention on creating mobile devices for the Windows Phone platform.