Nokia Past ‘Point Of No Return’ In Microsoft Deal

Nokia 8Hermann / Pixabay

It looks like Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) will be cleared for landing by shareholders for its deal with Microsoft. Analysts at ABG Sundal Collier point to several reasons to think the deal will happen, even though it hasn’t been officially approved yet.

Nokia Past 'Point Of No Return' In Microsoft Deal

Why Nokia’s deal with Microsoft makes sense

First, unlike in some cases, Nokia just needs a simple majority of shareholders to vote in favor of selling its devices division to Microsoft Corporation (NASDAQ:MSFT). That’s a lot easier to pull off than it would be under other voting rules. Second, so far the stock market has seemed to overwhelmingly vote in favor of the deal as shares of Nokia stock have risen since the announcement.

In addition, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s other major parts will benefit greatly from the deal. The company’s Advanced Technologies patent division, HERE maps and Nokia Siemens Networks all have something to gain by getting rid of the devices part of the company. In addition, the company will still be able to “reengage the Nokia brand on mobile devices” starting in January of 2016.

Nokia’s board will want to state its case carefully

The analysts note that Nokia’s board of directors also has a few reasons to make sure they really sell the deal to shareholders so that they will pass it. For one thing, Nokia would have to pay Microsoft Corporation (NASDAQ:MSFT) a fee for damages if shareholders do not approve it. Microsoft could end up being Nokia’s biggest shareholder with up to a 8.9 percent stake in the company.

In addition, starting over the company’s devices division “would be fraught with severe difficulties,” in their view. They said the most likely outcome in that scenario would be the dissolution of the agreement between the two companies, which would leave Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) to fight the mobile battle alone.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at [email protected]

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