Microsoft has reached an agreement to acquire the handset and services business of Nokia for about $7.2 billion, an audacious effort to reshape itself for a mobile era that has largely passed it by, Nick Wingfield reports in The New York Times. Microsoft and Nokia said 32,000 Nokia employees would join Microsoft as a result of the all-cash deal, which makes the Finnish mobile phone pioneer the engine for Microsoft’s mobile efforts.
The deal also gives Microsoft a potential successor to Steven A. Ballmer, Microsoft’s chief executive, who will retire within 12 months: Stephen A. Elop, a former Microsoft executive who was running Nokia until the deal was signed, will rejoin Microsoft after the transaction closes.
“This agreement is really a bold step into the future for Microsoft,” Mr. Ballmer said by phone from Finland. “We’re excited about the talent capabilities it will bring to Microsoft.”
VERIZON SEALS $130 BILLION VODAFONE DEAL | Verizon Communications agreed on Monday to take full control of its wireless unit for $130 billion, in a bet that the American desire for cellphones and broadband services was still far from being sated, Michael J. de la Merced and Mark Scott report in DealBook. The deal, more than a decade in the making, allows Verizon to take advantage of receptive debt markets and its own strong stock to buy out its longtime partner, Vodafone of Britain. It also leaves Vodafone flush with cash to reinvest in its own businesses and buy competitors.
While the roughly 100 million Verizon Wireless customers probably will not see any immediate changes in service, the telecommunications industry is very much in flux, with new competitors like SoftBank of Japan in the market and new opportunities for wireless services emerging, DealBook writes. In light of those trends, Verizon deemed it essential to gain control of its biggest business, which in the most recent quarter accounted for $20 billion of the company’s nearly $30 billion in revenue. Among the company’s plans is bundling mobile broadband services with wired offerings like high-speed, fiber-optic connections.
“There’s a big phase of growth in the U.S. telecom market,” Lowell C. McAdam, Verizon’s chief executive, said in an interview. “The timing was perfect for us.” Under the terms of the deal, Verizon agreed to pay $58.9 billion in cash and an additional $60.2 billion worth of its shares to Vodafone, the latter of which will be distributed to Vodafone’s shareholders.
The banks helping to arrange and finance the transaction are eager to take part in a bonanza of fees, Mr. de la Merced reports. Advisers to Verizon could earn $110 million to $125 million, while bankers for Vodafone could reap $100 million to $118 million, according to estimates from Freeman & Company. In addition, with roughly $60 billion in financing, bankers could enjoy well over $150 million in fees for arranging the debt.
A LOOK BEHIND MCKINSEY’S SUCCESS | The management consulting firm McKinsey & Company has been the go-to strategy adviser for the world’s top companies. “So why has its advice, at times, turned out to be so bad?” Andrew Ross Sorkin writes in the DealBook column. “It often goes unmentioned, but McKinsey has indeed offered some of the worst advice in the annals of business.”
“A thought-provoking new book called ‘The Firm: The Story of McKinsey and Its Secret Influence on American Business,’ which comes out next Tuesday, offers a fascinating look behind the company’s success,” Mr. Sorkin writes. “The book, by Duff McDonald, chronicles McKinsey’s rise, but also raises an important question about it that is applicable to the entire netherworld of consultants, advisers and other corporate hangers-on: ‘Are they worth it or not?’”
ON THE AGENDA | The ISM manufacturing index for August is out at 10 a.m. Data on construction spending in July is out at 10 a.m. H&R Block reports earnings after the market closes.
MADOFF TRUSTEE ADDS DETAILS TO SUIT | J. Ezra Merkin, a prominent Wall Street financier who had earned a fortune investing his clients’ money with Bernard L. Madoff, “willfully blinded” himself to numerous indications that Mr. Madoff was a con man, according to new claims in a lawsuit filed on Friday in Federal District Court in Manhattan by the trustee for victims of Mr. Madoff’s fraud. The filing includes details of a 2003 meeting between Mr. Merkin and a research company in which Mr. Merkin admitted that he did not fully understand Mr. Madoff’s business and questioned its legitimacy, Peter Lattman reports in DealBook.
“Despite Merkin’s knowledge that Madoff was running a Ponzi scheme, that Bernard L. Madoff Investment Securities was a fraud, and that Madoff could not have achieved his incredible returns, Merkin never pressed Madoff for an explanation but instead participated in Madoff’s fraud,” wrote the trustee, Irving L. Picard, in the amended complaint, which updated an action originally filed in 2009.