Microsoft Corp will buy Nokia Corp's struggling cellphone business for 5.44 billion euros (USD 7.2 billion), as the US-based firm ties to catch up in a fast- growing mobile market dominated by Samsumg and Apple.
Post deal, the nature of the two companies will change - Nokia will be just a network equipment maker after it exits from the mobile-phone business it once dominated, while the world's largest software marker will move aggressively into hardware.
Nokia's Canadian boss Stephen Elop, who ran Microsoft's business software division before moving to Nokia in 2010, will now return to the US firm as head of its mobile devices business.
As part of the deal for Nokia's devices-and-services business, Microsoft will bring aboard 32,000 Nokia employees including Elop.
Elop is being considered a successor to Microsoft's retiring CEO Steve Ballmer, who is trying to remake the US firm into a gadget and services company like Apple before he departs, after disastrous attempts so far to compete in mobile devices.
Richmond-headquartered Microsoft will pay 3.79 billion euros for Nokia's devices unit and 1.65 billion euros for patents, according to a statement from the companies.
Nokia was Microsoft's closest partner in smartphones, with the ailing Finnish company one of the biggest supporters of Microsoft's phone software.
The deal strengthens Microsoft's entry in the key growth markets, including India, in mobiles and tablets, is expected to close in early 2014 subject to certain approvals.
Nokia shares jumped over 40 per cent on the Helsinki stock exchange following the announcement. Microsoft shares were marginally up 0.24 per cent in after market trading on Nasdaq.
