Is Samsung going to buy Nokia this year?

Are you sitting down? Because what we’re about to tell you something doesn’t make any sense to us whatsoever. Nokia’s stock price is up over ~~7.5%~~ 11% on the Helsinki Stock Exchange because there’s a rumor going around that Samsung is interested in buying the company. Think about that second. If you were to combine the world’s largest and second largest mobile phone companies around, you’d make a mobile handset vendor so powerful that they’d dominate roughly half the mobile phone industry.

Do we think this rumor is true? Absolutely not. If anyone is going to buy Nokia, it’ll probably be Microsoft, who today is struggling to get Windows Phone devices out onto the market and who in just a few short months will launch a new version of their desktop operating system that is focused on competing with Apple’s iPad. If Microsoft bought Nokia then the software company would open themselves up to some heated arguments from their current partners, but then again Apple has clearly demonstrated that owning both the platform and the hardware is the way to go if you want to make it big.

Now that Nokia’s market cap is barely $11 billion, it makes them a takeover target. To give you some perspective of how small that number is, Google paid $12.5 billion for Motorola last summer. The thousands upon thousands of patents that Nokia owns could be worth more if they were auctioned off separately, but it’s far too early to speculate if that would actually happen.

This isn’t the first time we’ve seen rumors that a company is interested in buying Nokia, but this is the first time that someone has suggested that said company is one of Nokia’s fiercest competitors. Again, we don’t think it’ll happen, but we just find it amazing that rumors can cause a stock price to move this much.

[Hat Tip to Aleksi Moisio]

Update: Nokia has no comment on the story and their share price was up 11% at a certain point during trading today.

Update: Swedish newspaper Dagens industri says Samsung is rumored to have offered 4 Euros per share. Multiply that by 3.74 billion Nokia shares and that’s 14.96 billion Euros or roughly $18.7 billion. That’s a 70% premium over Nokia’s current market cap.

About The Author

Stefan Constantinescu

Stefan Constantinescu (@WhatTheBit on Twitter) has loved technology since as far back as he can remember. It started with computers, but in the past few years his passion has turned to mobile devices. As a mobile phone enthusiast who lives and breathes devices that connect to the internet, he knows he is not alone with this radical fascination of all things wireless. He is strongly opinionated and enjoys a good debate so leave comments in his posts and he’ll get back to you! Stefan began blogging as a hobby in the fall of 2006 and joined IntoMobile in the summer of 2007. Later he got a job at Nokia in March 2008, but as of June 2009 he has rejoined the IntoMobile team. He is currently based out of Helsinki, Finland.

http://twitter.com/mobilephonesfan Mobile Phones Fan

Even if Nokia does receive acquisition offers, it’s likely they would sell only to Microsoft.

In a previous deal with Nvidia, Microsoft insisted upon a ‘right-of-first-refusal’ buyout clause, basically, it says that if anybody tries to buy 30% or more of Nvidia shares, Microsoft gets the chance to meet or beat that offer. This has been an open secret for many years.:

http://www.theinquirer.net/inquirer/news/2076436/microsofts-buyout-pact-nvidia-unearthed

Tho’ ‘first refusal’ clauses between corporations aren’t common, they do pop up in contracts where one party is seen as a ‘crucial partner’…their survival is key to the other party’s business fortunes. The Nvidia deal is a good example and hardly Microsoft’s first use of this gambit.

At the time (@ 2000), Nvidia were in bad straits and needed an immediate injection of funds to stay afloat. Microsoft came along to play white knight. The parallels are obvious when you consider that Nokia currently receive $250,000,000 in *quarterly* handouts from Microsoft.

Given Nokia’s poor financial condition and the strategic importance of their Lumia phones (already the #1 Windows Phone licensee, after just 8 months), it seems a fair bet that Microsoft would have prepared for outside buyout offers with a similar contractual arrangement.
http://profile.yahoo.com/4QHQB5GIWZO7LNDV45677QQC2I Jaclyn

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Anonymous

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Anonymous

Tommi’s latest rant on a Sammy buyout makes sense. Would be interesting..