Nokia 2013 Annual Report Download - page 7

REVIEW BY THE BOARD OF DIRECTORS 5
REVIEW
BY THE BOARD
OF DIRECTORS 2013
Year  constituted a remarkable time in the almost -
year history of Nokia as two major transactions reshaped the
company. In the fi rst, Nokia purchased the remaining half of a
leading telecommunications infrastructure business. In the
second, Nokia divested its devices business which for over
three decades had emerged to become a household name.
This has been a transformative time for Nokia, its shareholders,
people and other stakeholders. However, we believe that the
changes we have pursued and executed were in the interests
of Nokia and its shareholders, and today, we believe that the
company is on a new path and has the capability to grow a new.
Sale of substantially all of Devices & Services
business to Microsoft
The process leading to the announcement of the proposed
sale of substantially all of Nokia’s Devices & Services business
to Microsoft on September , , and eventually to the clos-
ing of the transaction on April , , started in early 
when Microsoft approached Nokia indicating its interest in
purchasing all or part of our Devices & Services business. After
this contact, we carried out an extensive strategic review and
considered a wide range of strategic alternatives and scenarios
for the company. This review included, among other things, a
thorough assessment of what would be possible within the
framework of the partnership with Microsoft, outside of it, as
well as the value of Nokia’s businesses and assets in diff erent
scenarios.
During this process and throughout the negotiations,
we consulted with our senior management as well as with
outside legal and fi nancial advisors. The negotiations with
Microsoft progressed and eventually resulted in an off er from
Microsoft to purchase substantially all of Nokia’s Devices &
Services business and to license our patents. After a thorough
and careful assessment, we determined at a meeting held
on September, , that the proposed transaction was
advisable, fair to, and in the best interests of Nokia and its
shareholders. We decided to enter into the transaction and
resolved to submit it to Nokia shareholders for confi rmation
and approval.
On September , , Nokia announced that it had signed
an agreement to enter into a transaction whereby Nokia would
sell to Microsoft substantially all of its Devices & Services
business, including the Mobile Phones and Smart Devices busi-
ness units as well as an industry-leading design team, opera-
tions including Nokia Devices & Services production facilities,
Devices & Services-related sales and marketing activities,
and related support functions. Also, in conjunction with the
closing of the transaction Nokia granted Microsoft a -years
non-exclusive license to its patents and Microsoft granted
Nokia reciprocal rights to use Microsoft patents in our HERE
services, our mapping and location services business. The
total purchase price was EUR . billion, of which EUR . bil-
lion related to the purchase of substantially all of the Devices
& Services business, and EUR . billion related to the  year
mutual patent license agreement and the option to extend
this agreement in perpetuity (hereafter the transaction is
referred to as the “Sale of the D&S Business”). In addition,
Microsoft became a strategic licensee of the HERE platform,
and separately pays Nokia for a four-year license.
On November , , Nokia’s shareholders confi rmed
and approved the transaction at the Extraordinary General
Meeting in Helsinki. We were very pleased by the overwhelm-
ingly strong support our shareholders gave for the transaction,
as total of over % of the votes cast were in favour of the
approval. Having received the approval of Nokia shareholders
and regulatory authorities as well as fulfi lling other customary
closing conditions, the transaction closed on April, .
Purchase of the remaining stake in NSN
During the summer we were able to move forward with
negotiating the purchase of Siemens’ share of Nokia Siemens
Networks, our infrastructure joint venture. We saw potential
in its leadership in next generation technologies, such as LTE,
as well as in its profi tability improvement, which was the result
of the focused strategy and successful implementation of
the company’s restructuring programme. We saw an oppor-
tunity to purchase Siemens’ share at what we believed to be
an attractive price and create value for our shareholders. We
announced the transaction on July ,  and the transaction
was completed on August , .
Interim governance
In connection with the announcement of the Microsoft trans-
action in September , the Board deemed it fi t to also re-
evaluate the governance and management roles for Nokia. As
Stephen Elop was agreed to transfer to Microsoft upon closing
of the transaction, he stepped aside as President and CEO of
Nokia Corporation, resigned from the Nokia Board of Directors,
and became Executive Vice President, Devices & Services, as
from September , , in order to avoid the perception of
any potential confl icts of interest.
On the same day, Risto Siilasmaa assumed the position of
interim CEO and Timo Ihamuotila assumed the position of
interim President, both in addition to their respective existing
duties as Chairman of the Nokia Board and CFO, respectively.