Nokia and Microsoft Merger: With Buyout Deal Delayed, What's the Holdup?
There was a time -- not so long ago, actually -- when Nokia was the leader of the pack when it came to mobile phone services. Now, of course, the mobile service provider is at the bottom of the food chain, consistently taking losses in every quarter. Now, however, Microsoft was proposing to buy out the embattled cell phone franchise... but there are delays in the merger. So what's going on?
According to Fox Business News, the delay has everything to do with the Asian regulations that the Finnish company hasn't seemed to abided by. However, the company is expected to meet all compliances by the time April rolls around, and that's when the deal will finally close -- at the very beginning of the second quarter.
"Nokia and Microsoft continue to be confident that the transaction will close," Nokia said in a statement, adding that "both companies are working diligently to close the transaction as expeditiously as possible."
And, according to Reuters, what will ultimately get this deal closed is Nokia's ability to concede to certain patents, as well. Both Google and Samsung have petitioned the Asian regulatory agencies to ensure that Nokia's deal with Microsoft -- which, it is estimated, is worth over $7 billion -- doesn't lead to higher licensing fees.
"(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 said. "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."
As of 2013, Nokia employed 87,771 people across 120 countries, conducts sales in more than 150 countries and reported annual revenues of around €30 billion. Nokia is a public limited-liability company listed on the Helsinki Stock Exchange and New York Stock Exchange. It is the world's 274th-largest company measured by 2013 revenues according to the Fortune Global 500. In 2013, Nokia sold what was once was the world's largest vendor of mobile phones to Microsoft as part of an overall deal totaling €5.44 billion (US$7.17 billion). Stephen Elop, Nokia's former CEO, and several other executives joined Microsoft as part of the deal. Nokia unveiled its third range on Feb. 24, 2014, the Nokia X family, which runs a modified version of the Android operating system. The range includes three mid-tier devices; Nokia X, Nokia X+ and Nokia XL.
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