Nokia Siemens Networks said Monday that it has agreed to pay $1.2 billion for Motorola’s network equipment business. The all-cash deal is expected to close by the end of 2010.
The WSJ reports Nokia Siemens is making the acquisition primarily to boost its position in U.S. and Japan markets, but the deal will also provide economies of scale and synergies in areas such as mobile broadband. NSN hopes to better compete with market leader Ericsson and third ranked Huawei Technologies.
Nokia Siemens sought to buy similar assets last year from bankrupt Canadian vendor Nortel, but it was beaten out by rival bidders Ericsson and then Ciena Corp. Ericsson won Nortel’s CDMA and LTE assets for $1.13 billion.
Nokia Siemens, a joint venture between Finland’s Nokia and Germany’s Siemens said it expects to strengthen its business relationships with telecom operators like China Mobile, Sprint Nextel and Vodafone.
Approximately 7,500 employees are expected to transfer to Nokia Siemens Networks from Motorola’s wireless network infrastructure business when the transaction closes, the companies said. No layoffs are anticipated, the companies say.
Motorola’s decision to break up the company through the sale of its network equipment business was demanded by corporate raider Carl Icahn, reports the WSJ. It aims to increase the company’s market value.
Motorola is expected to split itself into two companies in the first quarter, with Motorola Co-CEO Greg Brown taking over the enterprise mobility and public safety units, and co-CEO Sanjay Jha running the mobile devices and television set-top box businesses. Brown said the Nokia Siemens deal doesn’t affect the timing of the split, and declined to say which business would get the $1.2 billion.
Nokia Siemens will take over most of Motorola’s network equipment assets such as its GSM and CDMA business, while Motorola will retain control of the less widespread iDEN technology and a number of other assets such as network infrastructure related patents.
Motorola’s WiMAX unit, Samsung’s WiMAX unit and Huawei are all on Clearwire’s preferred vendor list and all offer a smooth transition to WiMAX 2.0 or LTE. Moto’s WiMax business was worth about $170 million last year, reports Light Reading, giving Motorola a 17 percent share of the total $1 billion global market for WiMax infrastructure and CPE in 2009.
Nokia Siemens is the world’s second-largest maker of wireless phone systems behind Ericsson and roughly even with Huawei, according to Redwood City, California-based researcher Dell’Oro Group. Motorola is the fourth-largest company in CDMA wireless systems, according to the researcher.