Nokia shares jump 45 per cent on Microsoft tie-up

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A huge technology deal done behind closed doors has been announced, with Microsoft's purchase of Nokia's mobile phone business for €5.44bn (£4.6bn) (release). Nokia shares have jumped 45 per cent on the news.

Finnish company Nokia will now be stripped down to a telecoms business, after negotiations that Nokia boss Risto Siilasmaa said involved more than 50 meetings this year.

Nokia phones such as the Lumia 920 (pictured) have been running Windows software for some time now, and many will see the deal as a natural synergy for Micrsoft boss Ballmer to compete with rivals Apple in the mobile market.

Ballmer, whose departure was announced in the last fortnight, has been slammed for missing out on the mobile revolution. This deal is a sign that he's been trying to catch up before his departure by the end fo the year.

Ishaq Siddiq, market strategist, ETX Capital:

This is Microsoft’s second largest deal in its history and for Nokia, it’s the end of 30 year affair with handsets which once saw the group become the world’s dominant maker of mobile phones.

So in assessing this deal, aside from the fact that the price-tag is a tasty deal for Microsoft, the agreement is mutually beneficial. Both companies entered a strategic alliance back in 2011 in which Microsoft provided Nokia with its Windows Phone operating system, orchestrated by Nokia’s CEO Stephen Elop who was formally at Microsoft’s business unit.

Elop understood Microsoft’s desire to enter the smartphone market which was dominated by Apple, BlackBerry and Google and also understood Nokia’s desperation to retain its market share in the handset market.

For Nokia, CEO Elop announced he will step down and become the head of this new mobile phones unit at Microsoft, his former company – he’s also touted as a likely front runner to replace Ballmer.

Risto Siilasmaa, Nokia’s chairman and interim chief executive:

After a thorough assessment of how to maximise shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders.

Steve Ballmer, Microsoft's chief executive:

It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services

It's shaping up to be a huge week for tech deals, with the Vodafone-Verizon deal also making headlines, the second largest corporate tie-up of all time.