Nokia, Siemens to Merge in $30B Venture

Nokia Corp. executive Simon Beresford-Wylie speaks during a press conference in Cannes, France, in this Feb. 14, 2005, file photo. Beresford-Wylie will reportedly head a new company formed by the combination of Nokia's and Siemens' telephone equipment units. (AP Photo/Lionel Cironneau) (Lionel Cironneau - AP)

"Siemens is a company with major technical competence and with good connections to the computer side, and they have a very strong position on the European market. Ericsson's system business will have a tougher challenger now."

Commenting on Nokia's ailing networks sector that often has offset the company's exceptional performance in the handset sector, Kallasvuo stressed the company's aim to improve its performance in the sector and expand operations.

"This means that Nokia is expanding its network operations," Kallasvuo said. "It is growing bigger, albeit with a partner. But it means that Nokia will be putting more into the division, and is a clear indication that Nokia, in the future too, will be extremely committed to this sector and ready to invest in it."

Klaus Kleinfeld, CEO of Munich-based Siemens, said the deal would position the new company to tackle Ericsson, which is the top maker and seller of network equipment.

"This combination creates a leading industry player with immediate strength, excellent potential for growth and well-positioned to improve future profitability," he said, adding that Siemens' business networks unit will be operated separately.

Siemens said in a statement earlier that it would "actively pursue the consolidation" of the unit and was "in negotiations with several interested parties."

Simon Beresford-Wylie, chief of Nokia's network operations, will head the new joint venture.

"We are right behind Ericsson and in a virtual tie with Alcatel," he told reporters in Frankfurt. "We have a presence in all geographic regions, developed and developing."

The companies declined to place a value on the deal. The New York Times and The Wall Street Journal reported it at more than $30 billion, citing unnamed people familiar with the transaction.

The new company will have some 60,000 employees and be based in the Finnish capital, Helsinki. It also will have key offices in Munich.

Kallasvuo took over as CEO on June 1 from Jorma Ollila, who during 14 years at the helm turned Espoo, Finland-based Nokia into the world's largest mobile phone maker.

Kallasvuo's appointment was widely seen as signaling continuity, but he had hinted that Nokia would expand its divisions, in part through increasing corporate purchases.