Nokia and Siemens may have to inject more cash into NSN
After failure of private equity talks, both owners say they are exploring several options, including restructuring and new buyers
Published: 28 June, 2011
READ MORE: M&A | Nokia Siemens Networks
More doubts surround the future ownership of Nokia Siemens, after its parents failed to find a buyer in the private equity community for a controlling stake, after months of talks. Equal owners Nokia and Siemens are now examining 'multiple options' for restructuring the joint venture, according to reports, as wireless infrastructure becomes an increasingly tough sector, and increasingly non-core to two giants which have plenty of other challenges in their main businesses.
However, according to The Wall Street Journal, new reorganization plans might require additional investment from the two firms, at least in the short term. Earlier this month, the paper indicated that two US private equity groups led by KKR and TPG backed away from negotiations to acquire a majority share in NSN. Their reasons were reported to be frustration at slow progress and inflexible approaches to price and ownership levels. A consortium of Gores Group and Platinum Equity was also said to be in the running for a stake.
These doors may have closed, but Nokia claims there are 'multiple options' still available. A spokesperson said: "NSN has been executing a turnaround and we're pleased with progress', suggesting the main priority was to increase profitability. The joint venture agreement expires next year and the group has struggled throughout its history, although it has been narrowing its losses and gaining market share, notably with the recent acquisition of Motorola Networks' wireless business. NSN made an operating loss of '686m in 2010, on revenue of '12.7bn.
While Nokia focused on organic options, Siemens was more upbeat about alternative prospects of selling a stake in NSN and said some talks were still ongoing. 'Negotiations are continuing' to sell a stake, said Siemens spokesperson Monika Langendorf.
'If someone wants to make a contribution and become a shareholder of NSN, we'll be listening to what they have to say,' commented Siemens CFO Joe Kaeser last week. 'So far, there has been no one else who said he could do anything we felt we couldn't do on our own.'
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