Nokia (NYSE:NOK) will reportedly buy Siemens' stake in Nokia Siemens, the two companies' network gear joint venture. According to Bloomberg, which broke the news and cited "three people familiar with the situation," the deal could be announced as soon as July 1.
Nokia is expected to take over Siemens' 50 percent share in NSN, paying less than $2.6 billion for the stake. A bridge loan would enable Nokia to make the acquisition, said Bloomberg, noting that a Siemens spokesman declined to comment.
A subsequent report from the Wall Street Journal, which cited "a person familiar with the situation," placed the stake's purchase price at $2.21 billion.
In April, the NSN partnership agreement between Nokia and Siemens officially expired. Both parent companies agreed to continue running their joint venture, while Siemens sought a suitable exit.
In mid-June, it was reported Siemens had approached private equity companies to discuss a possible sale of NSN and hoped to see the infrastructure firm sold in its entirety. However, Nokia was also rumored to be exploring a possible buyout of its German partner's stake in the 50-50 telecoms equipment joint venture.
NSN had been a problem child for Nokia and Siemens but turned around its fortunes thanks to a controversial strategy announced in November 2011. NSN's plan involved mass layoffs of 17,000 employees and focusing the business on specific geographies such as the United States, Japan and South Korea. In addition, it focused on specific business sectors, namely mobile broadband, which extends beyond the radio access network to include IMS, customer experience management (CEM) and more.
During the first quarter of 2013, NSN achieved underlying profitability for the fourth consecutive quarter and positive cash flow for the sixth consecutive quarter.
Further, NSN has become a shining star for struggling Nokia. During 2013's first three months, Nokia Group's net cash position improved by $156.57 million sequentially, with NSN contributing some $274.07 million, showing how important the infrastructure business has become to Nokia's survival.
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