Microsoft to buy Nokia’s handset business for £4.6bn

The move is Microsoft’s biggest yet into mobile devices, and brings executive Stephen Elop back into the fold.

Nokia chief Mr Elop, a former Microsoft executive, will return as Microsoft’s board considers a successor to current chief executive Steve Ballmer.

Mr Ballmer will depart sometime in the next 12 months after starting a reorganisation intended to transform the software company into a devices and services group in the mould of Apple Inc.

The sale of Nokia’s phone business marks the exit of a 150-year-old company that once dominated the global mobile phone market and remains one of Europe’s premier technology brands.

“For a lot of us Finns, including myself, Nokia phones are part of what we grew up with. Many first reactions to the deal will be emotional,” said Alexander Stubb, Finland’s minister for European Affairs and Foreign Trade, on his Twitter account.

The sale price of the phone business, at about one-quarter of its sales last year, represented a “fire sale level,” according to analyst Tero Kuittinen at consultancy Alekstra, although others disagreed on pricing.

“What should be paid for declining business, where market share has been constantly lost and profitability has been poor?” said Hannu Rauhala, an analyst at Pohjola Bank. “It is difficult to say if it’s cheap or expensive.”

Nokia - reduced to its networks business, navigation offerings and patent portfolio after the sale - is still the world’s second biggest mobile phone maker behind Samsung, but it is not in the top five in the more lucrative and faster-growing smartphone market.

Sales of Nokia’s Lumia series have helped the market share of Windows Phones in the global smartphone market climb to 3.3 per cent, according to consultancy Gartner, overtaking BlackBerry for the first time this year. Google Inc’s Android and Apple’s iOS system make up 90 per cent of the market.

Nokia said in a statement it expected that, apart from Nr Elop, senior executives Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber would transfer to Microsoft when the deal is concluded. It did not say what roles they would take there.

Nokia board chairman Risto Siilasmaa would take over CEO duties while the Finnish firm looked for a new CEO, it said.

The deal is expected to close in the first quarter of 2014, subject to approval by Nokia shareholders and regulators.