Nokia Corporation (ADR) (NYSE:NOK)’s deal with Microsoft Corporation (NASDAQ:MSFT) for the sale of its global handset business will reach its conclusion on Friday without the Indian unit. The Indian plant is undergoing a tax dispute, which does not seem to resolve in the near future. Therefore, it is likely that it will be excluded from the deal. As per the information provided on Thursday, by a spokeswoman of Nokia, the Indian factory will act as a unit for the manufacturing of contracts for Microsoft. This will be only for a period of 12 months after the closing of the 5.4 billion euros global deal.
“It’s highly unlikely that the plant will transfer, given that the (deal) closing with Microsoft is tomorrow,” the spokeswoman said. “If the asset doesn’t get transferred, we are entering into a service agreement with Microsoft.”
Dispute with Indian tax authorities
The Indian plant is one the biggest factory of Nokia Corporation (ADR)(NYSE:NOK) across the world employing around 6600 people. Nokia has been directed by an Indian court to pay a guarantee for potential tax dues in dispute with the Indian authorities. Also, the Finnish company is required to agree to few other conditions too before the transfer to Microsoft can be made. Nokia has also come up with a voluntary retirement scheme for its factory employees, earlier this month.
According to people familiar with the development, Nokia has already sent a service agreement to Microsoft Corporation (NASDAQ:MSFT), under which the Finnish firm would manufacture phones for Microsoft for a year.
Is HTC still in race?
Earlier this week, a report from Times of India, citing HTC’s CFO Chialin Chang, said that the Taiwanese smartphone make might acquire the Nokia Corporation (ADR)(NYSE:NOK)’s Chennai plant. Times of India quoted HTC’s CFO Chialin Chang as saying, “I am happy to look into it, because the overall preparation, exploration hinges upon if it will serve consumers better. If that (plant) will do that (service consumers better), then we would be happy to look further into it.” However, later HTC’s PR rep, in a clarification said that Chang has been misquoted in that particular article of Times of India. PR also added that HTC has no such intentions of purchasing the plant. PR specifically said that Mr. Chang’s comments were misunderstood in the interview.
