Nokia Siemens Networks agreed to buy Motorola's (NYSE:MOT) wireless networks business for $1.2 billion, a move that will likely strengthen NSN's position in North America and Japan. The announcement comes just days after a report pegged NSN as a likely buyer of the unit.
Under the transaction, Motorola will retain control of its iDEN networks business, as well as substantially all the patents related to its network infrastructure business. Around 7,500 employees are expected to be transferred from Motorola to Nokia Siemens when the deal closes, which is expected by year-end.
The deal is a significant coup for Nokia Siemens Networks, which lost out last year in a bidding war with larger rival Ericsson (NASDAQ:ERIC) for bankrupt Nortel Networks' main wireless assets. Ericsson won Nortel's CDMA and LTE assets for $1.13 billion. Although Motorola's networking unit makes mainly older equipment, Nokia Siemens stands to gain if some of Motorola's current customers decide to upgrade to new equipment. Motorola customers include Verizon Wireless (NYSE:VZ) and Sprint Nextel (NYSE:S), among others.
"Would it have been nice to get Nortel? Yes," Susan Shramm, the head of NSN's North American marketing, told FierceWireless. "Is this acquisition great on its own merits? Yes, absolutely."
Shramm said that the deal gives operator customers greater flexibility in determining their vendor partners for the future. She noted it was no accident Verizon (NYSE:VZ) CTO Richard Lynch was quoted in the company's press release about the deal. "The rationale for this allows him a more comfortable evolutionary path," she said. Shramm also noted that even though Ericsson and Alcatel-Lucent (NASDAQ: ALU) have won LTE radio access network deals from Verizon and AT&T Mobility (NYSE:T), Nokia Siemens is one of Verizon's IMS suppliers for the buildout.
The deal also gives Motorola more cash as its heads toward a separation of its businesses. Motorola is planning to split into two companies--called Motorola Solutions and Motorola Mobility--early next year, according to initial breakup plans the company filed with the Securities and Exchange Commission. Motorola co-CEO Greg Brown will lead the Solutions company, which will include Motorola's enterprise mobility business and what remains of its network infrastructure unit if the transaction with NSN goes through, and co-CEO Sanjay Jha will lead the Mobility company, made up of Motorola's handset unit and set-top box division.
Huawei, which has been battling with Nokia Siemens to be the world's No. 2 wireless infrastructure maker, had been mentioned as a potential bidder for Motorola's networks units. The company had assembled a host of advisers and lobbyists to help it overcome security concerns. However, according to the Wall Street Journal, which cited unnamed sources, talks between Moto and Huawei cooled off in recent weeks. A Huawei spokeswoman, Jannie Nguyen, declined to comment on the deal.
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