Microsoft is to acquire Nokia’s Devices and Services division in a deal worth £4.6 billion.
The agreement also includes the ability to license Nokia’s patents and license and use the firm’s mapping services. Nokia will retain its patent portfolio however, granting a ten-year license to Microsoft.
It also includes the mobile phones and smart devices businesses, as well as related production facilities and sales and marketing activities.
Breaking the purchase down, Microsoft is paying £3.2 billion for Nokia’s Devices andServices division, and a further £1.4 billion to license the patents.
Nokia CEO Stephen Elop has also stepped down from his position as CEO at the company to join Microsoft as executive VP of Devices and Studios.
In total, it is expected 32,000 people will join the computing firm.
Microsoft’s acquisition will go through in the first quarter of 2014.
“It’s a bold step into the future - a win-win for employees, shareholders and consumers of both companies,” said Microsoft CEO Steve Ballmer.
“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.
“In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution.”
Interim Nokia CEO Risto Siilasmaa added: “For Nokia, this is an important moment of reinvention and from a position of financial strength, we can build our next chapter. 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.
"Additionally, the deal offers future opportunities for many Nokia employees as part of a company with the strategy, financial resources and determination to succeed in the mobile space.”