Nokia, Siemens open to private equity partnership

Nokia (NYSE:NOK) and Siemens are open to making a deal with a private equity firm for an investment in Nokia Siemens Networks, executives from both parent companies confirmed to the Financial Times.  

Neither company is looking for an early exit from the infrastructure joint venture, but the executives said they are holding talks with private equity companies about buying a stake in NSN, which has weighed down the financial performance of both Nokia and Siemens. Both the FT and the Wall Street Journal reported last month that Nokia Siemens was in talks with private equity firms about a possible deal.

"We are always willing to talk to those who want to bring ideas and capital to the industry," Nokia CFO Timo Ihamuotila told the FT. "Nokia and Siemens will continue to be major shareholders of NSN in any likely scenario."

Executives from both companies said they are committed to turning around the company before considering their options when the JV ends in 2013. Nokia Siemens CEO Rajeev Suri confirmed to reporters that the company has received unsolicited offers from private equity firms. "This is unsolicited," Suri told Bloomberg in an interview. "We don't need capital. We don't need to do a deal with private equity. But, we would look at it. It can give us some strategic flexibility. We look forward not just to capital, but also to good ideas."

The FT, citing an unnamed source familiar with the situation, said "a handful" of potential investors are interested, and that a deal could be worth up to $1 billion and lead to an eventual initial public offering.

The companies started the joint venture in 2007, and posted a $2.1 billion operating loss in 2009. Nokia Siemens began a broad restructuring and cost-cutting program late last year. The company aims to reduce expenses by $733 million annually by the end of 2011 compared with the end of 2009. News of the talks comes shorty after NSN agreed to acquire Motorola's (NYSE:MOT) wireless networks business for $1.2 billion--a move that strengthens NSN's position in North America and Japan. Siemens CFO Joe Kaeser told the FT that NSN had become "more attractive for potential investors" after the cost-cutting measures and the Motorola deal.

For more:
- see this FT article
- see this Bloomberg article
- see this Reuters article

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