Siemens has sold its 50 per cent stake in Nokia Siemens Networks (NSN) for €1.7 billion (US$2.2 billion) to its joint venture partner, Nokia.
Siemens has long been looking to sell, and it had been expected that the buyer would be a private equity investor after a partial floatation of the stake had been ruled out.
Nokia said plans to retain the existing management and governance structure at NSN, which is not surprising as it already had management control of the company.
Stephen Elop, president and CEO of Nokia, commented: "With its clear strategic focus and strong leadership team NSN has structurally improved its operational and financial performance. Furthermore, NSN has established a clear leadership position in LTE, which provides an attractive growth opportunity."
The two companies set up the joint-venture in 2007, but it has struggled in recent years and underwent a substantial downsizing exercise last year. That effort has however turned the company around and it is expected to turn a profit within the year.
Nokia said that it will continue to consolidate NSN for financial reporting purposes as well as working towards pitching the company as an independent entity.
NSN’s operational headquarters will remain in Espoo, Finland, and the company will continue to have a strong regional presence in Germany, including its major hub in Munich.
The company’s restructuring plan remains unchanged as a result of the change in ownership.
Nokia also confirmed that the Siemens name will be phased out, and the new name will be announced once the deal secures regulatory approval.
The purchase price totals €1.7 billion, of which € 1.2 billion will be paid in cash at the closing of the transaction. The balance of €500 million will be paid in the form of a secured loan from Siemens due one year from closing. Nokia has obtained committed bank financing for the €1.2 billion cash portion.