Key changes at Nokia post acquisition by Microsoft: All you need to know

Nokia said its chief executive, Stephen Elop, will move to Microsoft Corp when the deal to acquire Nokia’s handset business is closed.

Nokia board chairman Risto Siilasmaa will take over CEO duties while the Finnish firm is looking for a new CEO.

Elop was hired as Nokia CEO in 2010 from Microsoft.

[caption id=“attachment_1080939” align=“alignleft” width=“380”] Elop to move to Microsoft post closure of deal[/caption]

Not just Elop, but senior executives Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber would also transfer to Microsoft when the deal was concluded.

Nokia expects to book a gain on sale of approximately 3.2 billion euros via the deal, and expects the transaction to be significantly accretive to earnings.

Key highlights:

Microsoft will acquire substantially all of Nokia’s Devices & Services business, including the Mobile Phones and Smart Devices business units as well as the design team and operations.

Approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland.

Nokia will retain its headquarters in Finland. Excluding the approximately 32,000 people planned to transfer to Microsoft, Nokia would have employed approximately 56,000 people at the end of the second quarter 2013.

Stephen Elop will step aside as President and CEO of Nokia Corporation, resign from the Board of Directors, and will become Executive Vice President, Devices & Services

Risto Siilasmaa will assume an interim CEO role for Nokia while continuing to serve in his role as Chairman of the Nokia Board of Directors

Siilasmaa will have four direct reports: Michael Halbherr, Executive Vice President, HERE; Stephen Elop, Executive Vice President, Devices & Services; Timo Ihamuotila, Nokia CFO and interim President; and Jesper Ovesen, Executive Chairman of the NSN Board of Directors.

Nokia’s CTO (Chief Technology Office) organization and patent portfolio will remain within the Nokia Group.

The operations that are planned to be transferred to Microsoft generated an estimated 14.9 billion euros, or almost 50% of Nokia’s net sales for the full year 2012.

Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing, and Microsoft will grant Nokia reciprocal rights related to HERE which is amapping and location service. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement to perpetuity.

Microsoft has agreed to a 10 year license arrangement with Nokia to use the Nokia brand on current Mobile Phones products. Nokia will continue to own and maintain the Nokia brand.

Nokia would be restricted from licensing the Nokia brand for use in connection with mobile device sales for 30 months and from using the Nokia brand on Nokia’s own mobile devices until December 31, 2015.

The transaction is subject to potential purchase price adjustments, protecting both Nokia and Microsoft, and a $750 million termination fee payable by Microsoft to Nokia in the event that the transaction fails to receive necessary regulatory clearances.

“Following this transaction, Nokia’s financial situation is expected to be significantly stronger and its earnings profile significantly improved,” said Nokia CFO and interim President Timo Ihamuotila. “We will have three well-positioned businesses, each a leader in its market,” he added.