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Nokia (NOK +4.2%) rallies after the WSJ reports Siemens (SI -0.5%) is talking to P-E firms,...

Nokia (NOK +4.2%) rallies after the WSJ reports Siemens (SI -0.5%) is talking to P-E firms, including TPG, KKR, and Blackstone, to "gauge their interest" in buying its 50% stake in Nokia Siemens, and that Nokia itself is thinking of buying Siemens out (possibly with the help of Finnish sovereign wealth fund Solidium). Analysts have pegged the value of NSN, which has turned profitable following a huge restructuring, at above €7B ($9.4B) after factoring debt. Bloomberg reported in February Nokia and Siemens had "intensified talks" to end Siemens' involvement in NSN.
Comments (33)
  • BornIn87
    , contributor
    Comments (92) | Send Message
     
    $4.6 Billion in cash, $8.4 Billion in short term investments, 50% of $9.4 Billion in NSN, and whatever else NOK is worth.
    Compare that with a $13.8 Billion market cap.
    14 Jun 2013, 10:10 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1839) | Send Message
     
    This would be great IMO, giving Nokia still full control of NSN and in friendly hands:

     

    "Nokia itself is thinking of buying Siemens out (possibly with the help of Finnish sovereign wealth fund Solidium)"!!
    14 Jun 2013, 10:19 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1839) | Send Message
     
    "Solidium is a limited company fully owned by the State of Finland. Its mission is to strengthen and stabilise Finnish ownership in nationally important companies and increase the value of its holdings in the long run. Investment activities are based on financial analysis. The core of Solidium’s investment strategy is proper, value-enhancing asset management of the current holdings. Solidium is a minority owner through its stakes in ten listed companies."

     

    http://bit.ly/11F4Fpx

     

    Solidium's current holdings:
    http://bit.ly/11F4FFO

     

    Full list here:
    http://bit.ly/11ejt1U

     

    Notice that (contrary to what many people think), currently Finnish gov does not have any direct stake/ownership in Nokia.
    14 Jun 2013, 10:29 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1839) | Send Message
     
    This is actually brilliant. It is politically much easier for the gov to buy part of NSN, NSN being profitable, than buy Nokia directly, which is still a questionable investment (see Solidium's mission statement).
    14 Jun 2013, 10:45 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1839) | Send Message
     
    Latest annual report, from 2011:
    http://bit.ly/11elYkO

     

    "Direct State holdings in listed companies plus Solidium’s market capitalisation account for 10
    per cent of the market capitalisation of the Nasdaq OMX Helsinki Stock Exchange. All in all,
    the market capitalisation of the listed companies with direct State holdings or indirect holdings
    through Solidium amounted to nearly EUR 68 billion at the end of 2011. Accordingly, one of the
    characteristics of State ownership in Finland is that the State is directly or indirectly involved
    as an owner in a relative large number of listed companies.

     

    Following the establishment of
    Solidium, the administration of non-controlling interests and ownership restructuring became
    more flexible because Solidium is in a position both to finance its affiliated companies and to
    buy equities without any specific budget appropriations.
    Solidium plays a key part as the State’s seeks to serve as an ‘anchor’ in its capacity as a committed
    shareholder in companies of national importance that often operate globally. Such commitment
    to long-term ownership helps to keep the head offices of major State-held corporations in
    Finland and – by working hand in hand with other large Finnish shareholders – boost the Finnish
    capital market. The State’s corporate assets are of great significance to society in this respect
    as well. Recently, the international competitiveness of the Finnish business and industry has
    been successfully reinforced through participation in ownership and sectoral restructuring,
    particularly in the case of Solidium companies."
    14 Jun 2013, 10:52 AM Reply Like
  • Abu Bakr Hussain
    , contributor
    Comments (595) | Send Message
     
    That would be fantastic news for NOK shareholders. Thanks for sharing the link Seppo.
    14 Jun 2013, 11:55 AM Reply Like
  • TheMasterPlan
    , contributor
    Comments (98) | Send Message
     
    Great information Seppo. Thank you very much.
    14 Jun 2013, 01:14 PM Reply Like
  • TalkingBox2
    , contributor
    Comments (7) | Send Message
     
    Good work Seppo, useful info, thanks
    14 Jun 2013, 01:49 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1839) | Send Message
     
    The original WSJ story here (available w/o subscription):
    http://on.wsj.com/12LBo2J

     

    Notably:

     

    "[Nokia] has held discussions with Solidium, the Finnish sovereign-wealth fund, which could help it pay for such a deal, people familiar with the matter said.

     

    Before such a deal can be struck, however, significant obstacles must be overcome. For one, if the European Commission viewed Solidium involvement as a form of state aid, that conclusion could complicate or possibly derail any such deal, according to one of the people."
    14 Jun 2013, 02:08 PM Reply Like
  • La Rue
    , contributor
    Comments (636) | Send Message
     
    Thanks for all the links you supply Seppo2. It helps to combat all the negative bs. This will be huge and just what Nokia needs.
    14 Jun 2013, 10:42 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1839) | Send Message
     
    Thanks, I am pretty excited. Still a rumor though, but is a plausible one.
    14 Jun 2013, 10:55 AM Reply Like
  • JMstocks75
    , contributor
    Comments (250) | Send Message
     
    so if NSN is IPO, nok stock loses about 1.30 in vaule, if nokia buys nsn, cashpile will be cut in half, and stock will drop, not sure if this is good for Nok
    14 Jun 2013, 04:55 PM Reply Like
  • Leont68
    , contributor
    Comments (1351) | Send Message
     
    Companies spinoff units to unlock shareholder value http://usat.ly/11tMsdq
    14 Jun 2013, 05:03 PM Reply Like
  • solucky
    , contributor
    Comments (6248) | Send Message
     
    Its a solution that i prefer.

     

    Mobile networks are a growth story next year and guess any other buyer want a huge discount to buy NSN. If Nokia get the discount themselve its like free money.

     

    Under 3 billion EURO would be a nice deal, maybee MSFT can help out a bit too.
    14 Jun 2013, 11:12 AM Reply Like
  • leotheyoung
    , contributor
    Comments (6) | Send Message
     
    What would be the best for Nokia, that a P-E firm buys its 50% stake or that Nokia buys the 50% stake from Siemens?
    14 Jun 2013, 12:39 PM Reply Like
  • solucky
    , contributor
    Comments (6248) | Send Message
     
    P-E firms want to make money so you never get the full value, at least thats my understanding.
    14 Jun 2013, 01:06 PM Reply Like
  • TheMasterPlan
    , contributor
    Comments (98) | Send Message
     
    I would prefer Nokia buys the 50% stake.
    14 Jun 2013, 01:15 PM Reply Like
  • TalkingBox2
    , contributor
    Comments (7) | Send Message
     
    Agreed, but with the right type of financing
    14 Jun 2013, 01:51 PM Reply Like
  • Swliv
    , contributor
    Comments (128) | Send Message
     
    Any chance it distracts NOK from massive mobile-market challenges co. faces? Is NSN managed fairly independently now or does it take time from NOK management (or get time from Siemens management it would lose)?

     

    Appreciate the analysis in comments.
    14 Jun 2013, 03:47 PM Reply Like
  • Z!
    , contributor
    Comments (27) | Send Message
     
    NSN is an independently managed subsidiary.
    14 Jun 2013, 06:04 PM Reply Like
  • logic001
    , contributor
    Comments (136) | Send Message
     
    This would work out so well. Fully support Solidium here
    14 Jun 2013, 12:39 PM Reply Like
  • mepa84
    , contributor
    Comments (48) | Send Message
     
    A question. If NSN is a great investment for Nokia and P-E firms and will grow nicely next year to become a cash cow why Siemens is desperate to sell it? Do they know something internally that the small investors don't?
    14 Jun 2013, 02:12 PM Reply Like
  • Abu Bakr Hussain
    , contributor
    Comments (595) | Send Message
     
    Mepa - it's just the way some companies operate. They like to focus on their "core competencies" and shed marginal assets. For example. I believe GE under Jack Welch had the policy to be either 1st or 2nd in a market or not at all. I don't think it means that NSN has any problems, it's just that a company with a market cap of $100bn doesn't want to be a minority stakeholder (to a company 10 times smaller) in a business it no longer has interest in.
    14 Jun 2013, 03:03 PM Reply Like
  • solucky
    , contributor
    Comments (6248) | Send Message
     
    Dont forget that NSN was not a successfull story for years.

     

    An additional information might be that Siemens had also a joint venture with Fujitzu and there own phone division.There was a cross business at sample Servers from Fujitzu Siemens to NSN.

     

    Siemens is out of that Joint venture so no cross business.
    14 Jun 2013, 03:08 PM Reply Like
  • Swliv
    , contributor
    Comments (128) | Send Message
     
    Yeh, I worry the profits are a result of restructuring but not long-term growth-forward stable. Partic. if profits were a precondition to bringing Solidium in.
    14 Jun 2013, 03:50 PM Reply Like
  • jjmc2001
    , contributor
    Comments (1266) | Send Message
     
    Maybe it is just my free market bias but I would rather not have any government entity (direct or otherwise) involved. I would prefer to see NSN valued by public markets. A partial IPO or spin off of the 50% non NOK interest would monetize the NOK share at true market prices. It would be great to see NOK buy the 50% at a discount and then do the IPO but I suspect there are lots of investment bankers trolling about waiting to make fees on this restructure.
    14 Jun 2013, 04:23 PM Reply Like
  • WealthManager
    , contributor
    Comments (145) | Send Message
     
    I don't think government participation is a good alternative. I would prefer Nokia to take over NSN and then float it through IPO. That would put a market price on NSN and improve valuation of Nokia share.
    14 Jun 2013, 04:38 PM Reply Like
  • mKiwi
    , contributor
    Comments (498) | Send Message
     
    I am a Nokia shareholder. I don't pretend to know much about NSN. I assume it is a mobile infrastructure company. It would seem that a huge company like Siemens would have allot of technical expertise to bring to the table in a partnership with Nokia. A PE firm would have little technical expertise to grow the company. Why not partner with another player in the industry such as Alcatel-Lucent or dare I say it Huawei. Someone who can bring technical expertise and growth potential to the partnership. Huawei for example could be a doorway into the Chinese market.
    15 Jun 2013, 09:34 AM Reply Like
  • WealthManager
    , contributor
    Comments (145) | Send Message
     
    NSN is a technology leader in its field, not Siemens or Huawei have any additional expertise that would benefit NSN
    15 Jun 2013, 12:38 PM Reply Like
  • Mr. Knowitall
    , contributor
    Comments (6686) | Send Message
     
    To hand NSN to Huawei would mean a jettison from the US and possibly the UK as the Chinese government has undue influence over the company and there are serious trust concerns there.

     

    http://tcrn.ch/ZTqrdP

     

    http://bit.ly/10lfFxh

     

    These are not necessarily my views, but problems to consider with this type of partnership/sale.
    15 Jun 2013, 12:55 PM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1839) | Send Message
     
    @MrK Include Canada on that list too...
    15 Jun 2013, 01:09 PM Reply Like
  • ewmpsi
    , contributor
    Comments (1408) | Send Message
     
    Keep your eyes on the Nokia Options for a clue on price action:

     

    Nokia Corporation (ADR) (NOK) Bounce Draws Option Bulls | Daily Option Blog | Schaeffer's Investment Research
    http://bit.ly/11HMory
    15 Jun 2013, 09:42 PM Reply Like
  • La Rue
    , contributor
    Comments (636) | Send Message
     
    Thanks for the link. Long Nokia.
    15 Jun 2013, 10:10 PM Reply Like
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