Microsoft Corp. , on the heels of announcing the planned retirement of Chief Executive Steve Ballmer, has agreed to buy most of Nokia Corp.'s devices and services business and bring aboard several executives who could be contenders for Ballmer's job.
The companies said Monday that Microsoft will pay 3.79 billion euros ($5 billion U.S.) to buy "substantially all" of the Nokia business, which includes its smartphone operations. The Redmond, Wash., company will pay EUR1.65 billion to license Nokia's patents, the companies said.
Stephen Elop, Nokia's CEO, and several other executives are joining Microsoft as part of the deal. Elop, a former Microsoft executive, is among the names being circulated as Ballmer's successor. Microsoft recently announced that Ballmer will retire from his post within a year, or when the next CEO is chosen.
Nokia was already Microsoft's closest partner in smartphones, with the Finnish company one of the biggest supporters of Microsoft's phone software.
The deal with Nokia is an apparent acknowledgement that Microsoft needs a stronger hand to play in the mobile-phone business, where it is playing catch-up to Apple Inc. and Google Inc. Microsoft's lagging position in mobile is one of the most serious threats Ballmer's successor will need to tackle. The deal also is a recognition by Nokia that it is better selling off its smartphone business than tackling rivals like Apple on its own.
The Wall Street Journal reported in June that Microsoft and Nokia had discussed a sale of Nokia's mobile-phone business, but the talks fell apart over the price of the transaction.
The companies said Microsoft is expected to use its stockpile of overseas cash to pay for the Nokia purchase and licensing pact. Microsoft and Nokia said the transaction is expected to close in the first three months of 2014, subject to approval by Nokia shareholders and other conditions.
