Nokia, Siemens to combine network-gear units

Klaus Kleinfeld, CEO of Munich-based Siemens, said the deal would position the new company to tackle Ericsson, which is the top maker and seller of network equipment.

“This combination creates a leading industry player with immediate strength, excellent potential for growth and well-positioned to improve future profitability,” he said, adding that Siemens’ business networks unit will be operated separately.

Siemens said in a statement earlier that it would “actively pursue the consolidation” of the unit and was “in negotiations with several interested parties.”

Simon Beresford-Wylie, chief of Nokia’s network operations, will head the new joint venture.

“We are right behind Ericsson and in a virtual tie with Alcatel,” he told reporters in Frankfurt. “We have a presence in all geographic regions, developed and developing.”

The companies declined to place a value on the deal. The New York Times and The Wall Street Journal reported it at more than $30 billion, citing unnamed people familiar with the transaction.

The new company will have some 60,000 employees and be based in the Finnish capital, Helsinki. It also will have key offices in Munich.

Kallasvuo took over as CEO on June 1 from Jorma Ollila, who during 14 years at the helm turned Espoo, Finland-based Nokia into the world’s largest mobile phone maker.

Kallasvuo’s appointment was widely seen as signaling continuity, but he had hinted that Nokia would expand its divisions, in part through increasing corporate purchases.

The joint venture was expected to be finalized by the end of the year, pending regulatory approval, and both companies said that between 10 percent and 15 percent of staff positions, or about 9,000 jobs, would likely be cut over the next four years in a bid to save $1.9 billion.

Nokia employs 62,000 people. Siemens, Europe’s largest electronics and electrical engineering company, employs more than 460,000 people.

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