Report: Private equity firms back away from Nokia Siemens stake

Two U.S. private equity firms, KKR and TPG, backed out of talks with Nokia Siemens Network to acquire a stake in the equipment vendor, according to a report in the Financial Times.

The report, citing unnamed sources familiar with the deal, said that the two firms dropped out of the bidding after failing to agree with NSN on how much control they would have in the company as well as a price for the stake, which could total billions of dollars. Additionally, the report said that the withdrawal of those two firms leaves the Gores Group and Platinum Equity as the only remaining firms in the bidding consortium.

"As we have said earlier, there has been unsolicited interest in NSN and we continue to be in constructive talks with multiple parties," Nokia said in a statement. The company said NSN has "real momentum and innovation, and shareholder interests are aligned in building a strong and profitable company."

Nokia Siemens has been holding discussions with private equity firms about buying a stake in the joint venture between Finland's Nokia (NYSE:NOK) and Germany's Siemens since August 2010. However, no definitive agreement has been reached and a top Siemens executive recently tried to tone down speculation on a stake sale.
Siemens CFO Joe Kaeser told reporters in May that NSN would focus on gaining market share and profitability. Kaeser seemed to indicate that a stake sale was not a top priority; he said that such a sale "is not a determinant in the business development" for Nokia Siemens, and that a sale is an option that is "not interesting."

In the first quarter, Nokia Siemens narrowed its operating loss to $203 million, down from $322.5 million in the year-ago quarter. Sales clocked in at $4.6 billion, up from $3.94 billion in the year-ago period. The company also closed its $975 million acquisition of Motorola Solutions' (NYSE:MSI) wireless networking business at the end of April after months of delays. That deal is expected to improve NSN's position in the U.S. as well as Japan.

For more:
- see this Financial Times article (sub. req.)
- see this Bloomberg article
- see this WSJ article (sub. req.)

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