Nokia: face-off spot

Playing with Microsoft has resulted in an ugly game

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Helsinki’s Ice Hall is the home arena of a Finnish ice-hockey team and so well used to ferocious clashes. Which makes it a brave choice as the site for Tuesday’s meeting of investors in Nokia. They are being asked to bless the €3.8bn sale of its lossmaking handset unit to Microsoft, a deal announced two months ago but the focus of much subsequent controversy. Executives can expect to end the day with a few bruises.

There are certainly some valuation questions that the shareholders, likely to show up in their thousands, will want to ask. For a start, there is the matter of how an industry leader in a growth business such as mobile telephony ended up in such a parlous state. More specifically, Nokia investors might want to know why €3.8bn is the right price for the devices unit – or, for that matter, €1.6bn for a related patent licence deal between the Finnish group and the US software giant. Proxy documents were bland almost to the point of silence on this score, stating only that directors conducted an extensive evaluation, with a brief adviser fairness opinion attached.

To these issues can be added the large pay-off – €19m as of September – to Nokia’s former boss Stephen Elop. Thanks to a Nokia waiver, he will return to Microsoft and profit handsomely – unlike shareholders, who have seen their shares fall by one-fifth since his arrival at Nokia’s helm. And even those investors who are more focused on Nokia’s future might have a few queries. Analysts are still trying to assess the value of the patent portfolio, while the extent to which spare cash will go back to shareholders has yet to be detailed.

For all that, it would be a big surprise if the devices deal did not proceed. Provisions in the agreement always made it unlikely that other bidders would emerge and the stock market is largely pricing the deal in. Tuesday should blow a final whistle – but it has been an ugly game.

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