http://www.microsoft.com/en-us/news/press/2013/Sep13/09-02An...
This is almost certainly to lubricate regulatory approval, and because it unleashes a Nokia patent monster upon the lands.
The main points of the deal are:
- Microsoft pays € 5.44 Billions for all of its Devices & Services business, including the Mobile Phones and Smart Devices business units as well as an industry-leading design team, operations including all Nokia Devices & Services production facilities, Devices & Services-related sales and marketing activities, and related support functions.
- Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing (with option to extend to perpetuity), and Microsoft will grant Nokia reciprocal rights related to HERE services.
- Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license.
- Microsoft has agreed to make immediately available to Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible bonds to be issued by Nokia maturing in 5, 6 and 7 years respectively. It is at Nokia’s discretion if it chooses to draw down all or some of these tranches.
- To avoid the perception of any potential conflict of interest between now and the pending closure of the transaction, Stephen Elop will step aside as President and CEO of Nokia Corporation, resign from the Board of Directors, and will become Executive Vice President, Devices & Services
[1] http://www.efinancehub.com/nokia-corporation-adr-nysenok-doi...
Microsoft will also immediately make available to Nokia EUR 1.5 billion of financing in the form of three EUR 500 million tranches of convertible notes that Microsoft would fund from overseas resources. If Nokia decides to draw down on this financing option, Nokia would pay back these notes to Microsoft from the proceeds of the deal upon closing. The financing is not conditional on the transaction closing.
Sounds like Nokia may be running into a cash crunch? They specify that the financing is not dependent on the transaction closing - so it seems as if Nokia needs the money either way, and if the transaction closes they will repay MSFT.
Interesting.
That's basically the same isn't it? A patent can only remain active for 20 years, assuming most of the patents are several years old the majority of them will be pretty close to expiration in 10 years time.
Note: I'm basing this on NZ patent law, but I assuming it's the same for any 1st world country...
If Microsoft owned the patents they could enforce them against others. As a licensee, they simply protect themselves from Nokia enforcing it against them.
As I said elsewhere in here, a Nokia with a big stack of patents and no hardware business is going to be an ugly thing for the industry: They can go gangbusters with patent assaults while having nothing for their victim's to attack in return. All the while Microsoft will be enjoying their 10-year license.
Hmm that sounds rather a lot like mafia. "Pay up or else, no matter whether we're owned by you."
Thanks for the clarification, that makes sense
As for the Nokia patent monster, well... it's already been rampaging the countryside for a few months now. I haven't thought through the ramifications of this deal, but I wonder if it would allow them the same immunity that trolls enjoy?