What will happen if the Nokia Devices and Services sale is not approved by Nokia Shareholders?

One of our readers highlights question 4 (unlucky number at Nokia apparently) which asks what would happen should the Nokia-MS deal not go through. It’s a huge document that might answer a lot of questions regarding the Nokia-MS arrangement. There’s a section afterwards that then goes on to discuss risks should the deal not go through. It’s not 100% set in stone that the deal will take place. It’s highly likely, but the shareholders still have powers to decide otherwise.

http://i.nokia.com/blob/view/-/3006738/data/2/-/Proxy-materials.pdf

WHAT WILL HAPPEN IF THE SALE OF THE D&S BUSINESS IS NOT CONFIRMED AND
APPROVED BY OUR SHAREHOLDERS AT THE EXTRAORDINARY GENERAL MEETING?

If the Sale of the D&S Business is not confirmed and approved by our shareholders at the
Extraordinary General Meeting, we will not sell the D&S Business to Microsoft International at this
time and we will continue to conduct our business in the ordinary course and evaluate all available
go-forward strategic alternatives. In addition, both Nokia and Microsoft International will have the
right to terminate the Purchase Agreement and we would be obligated to pay Microsoft
International or its designee a damages fee equal to EUR 37,900,000.
If the Purchase Agreement is terminated because our shareholders do not confirm and approve
the Sale of the D&S Business at the Extraordinary General Meeting and we receive a competing
proposal to acquire control of at least 20% of our voting securities or all or a material portion of the
D&S Business that has not been withdrawn prior to termination of the Purchase Agreement and
within one year of termination we consummate a transaction with regard to any competing
proposal, we would be obligated to pay Microsoft International or its designee an additional fee
equal to EUR 113,700,000 less the EUR 37,900,000 damages fee if previously paid to Microsoft
International or its designee.
Further, if the Sale of the D&S Business is not approved by our shareholders at the Extraordinary
General Meeting, the Patent License Agreement will not become effective and we will not receive
the EUR 1.65 billion payable under the Patent License Agreement from Microsoft (EUR 100 million
of which is payable as consideration for Microsoft’s unilateral right to extend the term of the Patent
License Agreement to perpetuity). In addition, Microsoft will not become a licensee of Nokia’s
HERE location platform.

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Another question, what if there’s a competing offer?

WHAT WILL HAPPEN IF THERE IS A COMPETING PROPOSAL TO ACQUIRE THE D&S
BUSINESS?
A: Under the Purchase Agreement, we are not permitted to initiate, solicit, discuss, knowingly
facilitate or negotiate any inquiries, proposals or offers from, or enter into any agreement, with a
third party to acquire control of at least 20% of our voting securities or all or a material portion of
the D&S Business. Our Board of Directors may not change, withdraw or qualify its
recommendation in favor of the Sale of the D&S Business or publicly propose or recommend any
competing proposal.
If we receive an unsolicited competing proposal, we may contact the party making the proposal to
clarify its terms. If our Board of Directors determines in good faith that such a competing proposal
is or could reasonably be expected to result in a proposal that is superior to the transactions
contemplated by the Purchase Agreement and the competing proposal seeks to acquire control of
at least 75% of our voting securities or all or a material portion of the D&S Business, we may
negotiate the proposal and furnish the person making the proposal with information about us after
entering into a confidentiality agreement that is materially not less favorable to us than our
confidentiality agreement with Microsoft. Prior to our shareholders voting on whether to confirm
and approve the Sale of the D&S Business at the Extraordinary General Meeting, Nokia’s Board of
Directors may, with respect to a superior proposal, publicly change its recommendation with
respect to the Sale of the D&S Business, but only after granting Microsoft International a right to
match such proposal.
If our Board of Directors changes, withdraws or qualifies its recommendation in favor of the Sale of
the D&S Business in a manner adverse to Microsoft International or fails to recommend against a
tender offer or exchange offer for any outstanding shares of Nokia that constitutes a competing
proposal, Microsoft International would have the right to terminate the Purchase Agreement and
we would be obligated to pay Microsoft International or its designee a termination fee equal to
EUR 113,700,000.
Even if Nokia’s Board of Directors changes its recommendation with respect to the Sale of the
D&S Business, pursuant to the Purchase Agreement, our shareholders will still have an
opportunity to vote on the Sale of the D&S Business at the Extraordinary General Meeting.

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Quite importantly:

. WHO IS ENTITLED TO VOTE AT THE EXTRAORDINARY GENERAL MEETING?
A: Each shareholder who is registered in the Register of Shareholders of the Company on the
Record Date of November 7, 2013 has the right to participate in the Extraordinary General
Meeting. A shareholder whose shares are registered on such shareholder’s Finnish book-entry
account is automatically registered in the Register of Shareholders of the Company. A nominee
registered shareholder may be temporarily registered in the Register of Shareholders in order to
be able to participate in the Extraordinary General Meeting of Shareholders if such shareholder
has the right to be registered in the Register of Shareholders on the Record Date of November 7,
2013. Shareholders who hold nominee registered shares must follow the instructions of their
broker in order to be temporarily registered in the Register of Shareholders. ADS holders who
have provided their voting instructions to the Depositary as described in detail in the Depositary’s
Notice will be automatically recorded in the Register of Shareholders

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How was the price negotiated?

HOW WAS THE PURCHASE PRICE FOR THE D&S BUSINESS DETERMINED?
A: The purchase price for the D&S Business proposed to be sold to Microsoft International was
negotiated between representatives of Nokia and representatives of Microsoft. In determining an
appropriate price for the D&S Business, Nokia’s Board of Directors engaged in an extensive
evaluation of Nokia’s business plans and prospects, assessed current business trends and the
rapidly changing competitive dynamics in the mobile phone and smartphone markets, compared
prices paid in similar precedent transactions and reviewed the valuations of other similar publicly
5traded companies. Nokia’s Board of Directors worked with Nokia’s management to consider
alternative strategies with respect to the D&S Business and Nokia’s partnership with Microsoft,
including but not limited to changing the platform for Nokia’s smartphones, selling some or all of
the D&S Business to other potential acquirers and amending the agreement governing Nokia and
Microsoft’s partnership (the “Existing Commercial Agreement”).
We have also received a fairness opinion from J.P. Morgan Limited concluding that the
consideration to be received for the D&S Business is fair, from a financial point of view, to Nokia. A
copy of the fairness opinion from J.P. Morgan Limited is included as Annex A to these proxy
materials.

• Page 22; Reasons for the Sale of the D&S Business

Cheers ms.nokia for the tip.

Category: Nokia