Nokia Oyj announced that the company has decided to exclude its phone factory located in India from the 5.44-billion-euro (7.5-billion-dollar) deal over the acquisition of its handset unit by Microsoft Corp. The reason for the companys decision is a tax dispute.
As reported by Bloomberg, one of the spokeswomen of Nokia Oyj in India – Ms. Poona Kaul explained in a telephone call: “We are leaving out the plant because of the tax issues.”
The deal between Nokia and Microsoft is expected to be officially finalised on April 25th. The deal is estimated to 5.44 billion euros. The fate of Nokias phone plant located in India, which is one of the largest factories of the company, has not been clarified since the beginning of the negotiations.
The factory in question employs about 8 000 people and is responsible for producing more than twelve models of Nokias handsets. The tax dispute about it, was provoked by the Indian tax departments belief that Nokia has claimed tax exemptions on software exports without having the right to do so. This claim was denied by the company.
One of the Nokia Oyjs spokeswomen – Brett Young – said in a statement, which was cited by Bloomberg: “Nokia strongly believes its offer to the Indian tax department is fair.”
The terms of the deal between Mocrosoft Corp. and Nokia Oyj would not be affected by the decision of the company to exclude its Indian factory. However, Nokia would have to work in cooperation with the contracting party during the so-called “transitional period” in order to continue to manufacture handsets. According to two people with knowledge of the negotiations and the acquisition process, Microsoft Corp. has already been made an offer of a services agreement by Nokia.
Nokia Oyj added 0.09% to trade at 5.32 euros per share by 13:08 GMT, marking a one year change of +116.79%. According to the information published on the Financial Times, the 34 analysts offering 12-month price targets for Nokia Oyj have a median target of 5.45, with a high estimate of 8.40 and a low estimate of 4.00. The median estimate represents a 2.44% increase from the last price of 5.32.
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