Nokia Corp. (NYSE: NOK) and Siemens (NYSE: SI) will continue to remain the sole owners of Nokia Siemens Networks (NSN) for the foreseeable future are the two companies turned down offers from private equity firms to buy a major stake in the venture.
In a joint statement, the two vendors said that they "have completed a review of offers and have decided to continue the shareholding structure as is."
Rumors emerged over the past year that both Nokia and Siemens wanted to sell the venture, with both confirming they were speaking with various potential investors. Some of the possible suitors interested in NSN included a consortia of Gores Group and Platinum Equity in addition Kohlberg Kravis Roberts & Co and TPG Capital, which decided to walk away from the talks.
Each of NSN's owners wrote down the value of their holdings, which Bernstein Research believes are worth about €7-8 billion ($10 billion to $11.4 billion). One of the private equity offers Nokia and Siemens received for NSN is rumored to be even less than their figures.
Since 2007, NSN has struggled to find some path to profitability as service providers cut wireless and wireline network spending and losing out deals to not only fellow European rival Ericsson, but also the growth of low-cost Asia Pacific vendors Huawei and ZTE.
However, there appears to be some ray of light for NSN as it shareholders said the venture has "made good progress in its turnaround plan." In Q1 2011, NSN reported a third consecutive quarter of sales growth and has been profitable at the adjusted operating level for five quarters since announcing a turnaround plan in November 2009.
Although they did not give specific details, the shareholders added that Nokia Siemens Networks will continue to make an effort to "improve the competitiveness of the company as a standalone entity."
For now, Nokia and Siemens may be committed to NSN, but inevitably both companies have maintained that they would like to both exit the venture at some point.
- Reuters has this article
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