Sep 4 2013, 7:48am CDT | by IANS
Early Tuesday morning, Nokia announced the merger in a press release on its website, and triggered quick follow-up reports from media.
It agreed to sell the devices and services business at a price of 3.79 billion euros, and license its patents for 1.65 billion euros. The company will then focus on infrastructure, mapping and licensing, reports Xinhua.
While some believe the total amount of 5.44 billion euros, or about $7.2 billion, was acceptable considering the shrinkage of Nokia phones' market share, others argued it was a notably low price.
Nearly two years back, Microsoft acquired internet communication company Skype at a higher cost of $8.5 billion.
The stock market reacted positively. Soon after the opening of Helsinki Stock Exchange Tuesday morning, Nokia's share price surged by 47 percent from 2.96 euros to 4.33 euros.
"After a thorough assessment of how to maximize shareholder value ... we believe this transaction is the best path forward for Nokia and its shareholders," said Risto Siilasmaa, who chairs Nokia board of directors and will become interim CEO after the transaction.
It seems to be necessary to integrate hardware and software, now that Google and Apple are leading the market by doing so, he added.
According to the press release, Nokia's headquarters will remain in Espoo and all the 4,700 Finnish workers will continue to work here.
None of the Nokia staff member commented on the transaction.
"They are not sure about their own future," said a public servant who gave her name as Anna. "There was a time when many schools and a lot of majors were oriented toward Nokia, and people were educated to work for it," she added, apparently worried about the lack of diversity in the country's ICT industry.
Finnish Prime Minister Jyrki Katainen said the news confirmed the notion that Finland is undergoing a drastic transition period. However, he admitted that "Nokia links to emotion. Every Finn has experienced Nokia".
"End of an era" was the title of a news report by Yle, the Finnish broadcasting company. Recalling Nokia's rocky road of recovery, the article said the transaction marked the culmination of a recovery programme spearheaded by CEO Stephen Elop.
The Canadian and former Microsoft leadership member was recruited by Nokia in 2010 to rescue the company from downfall.
Reports said Elop will return to Microsft after the transaction, to be implemented in first quarter of 2014. He was widely believed to have a great potential to succeed Microsoft's outgoing CEO Steve Ballmer.
In this nordic country, where about 2 percent of GDP once came from Nokia, people evidently could not help from being dismayed.
"I have two Nokia phones. I am used to the logic. But what shall I use in the future? A Sumsung? An Apple? I really don't know," Anna murmured.
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