Nokia Siemens Networks will pay $1.2 billion for most of Motorola's wireless network equipment business, the companies announced Monday.
In striking the cash deal, Nokia Siemens hopes to improve its standing in the wireless equipment arena, both in the U.S. and across the world. The company said it expects the addition of Motorola's business will propel it to become the No. 3 wireless infrastructure vendor in the U.S. and the top foreign wireless vendor in Japan. It also expects to reinforce its No. 2 standing in the global wireless network market.
The deal is expected to strengthen Nokia Siemens' existing relationships with global wireless carriers and open the door to relationships with others.
Nokia Siemens, which is a 50-50 joint venture between Nokia and Siemens, also sees the deal as way to reach a wider range of customers. Motorola's wireless equipment business sells products and services tied to GSM, CDMA, WCDMA, WiMax, and LTE. It holds a leading market share in WiMax, said Nokia Siemens, with 41 contracts across 21 countries. Its market in CDMA is strong with 30 networks in 20 countries and its presence in GSM is robust as well, according to Nokia Siemens.
"As customers look to transition from CDMA networks to next-generation technologies, the addition of the Motorola wireless network infrastructure business is targeted to ensure that we are well placed to meet those needs," Bosco Novak, head of customer operations at Nokia Siemens Networks, said in a statement. "Together, we will utilize the combined strength of Nokia Siemens Networks' TD-LTE solutions and Motorola's WiMax and LTE businesses, to better meet customers' evolving technology and business needs."
Formed in 2007, Nokia Siemens Networks stumbled almost from the start, announcing early on that it would not meet financial expectations. Since then, the company has struggled to turn a profit as its market share has dwindled. Last summer, it was outbid by Ericsson in an attempt to pick up Nortel's wireless business. Then late last year, Nokia Siemens was forced to announce a major reorganization, complete with layoffs and cost cuts.
Motorola is also playing up the deal, with the company's co-CEO Greg Brown saying that it "will allow us to sharpen our strategic focus on providing mission and business critical solutions for our government, public safety, and enterprise customers."
Motorola is on the verge of breaking up, with plans to separate early next year into two different companies--one to sell its handsets and mobile devices and another to focus on products for the enterprise market.
As part of the deal, Motorola will hang on to its IDEN business and retain virtually all of the patents related to its wireless network business.
After the acquisition is finalized, around 7,500 employees in Motorola's wireless network business will shift to Nokia Siemens, including those at some of the large R&D sites in the U.S., China, and India. Both companies said they expect the deal to be completed by the end of 2010.
Correction at 9:10 a.m. PDT: Nokia Siemens lost out to Ericsson in a bid to buy Nortel's wireless business last year.