Nokia Siemens in plans to sell off optical unit

News 3 Dec, 2012

Company restructuring leads to sell-off to private equity.

Nokia Siemens Networks is to sell off its Optical Networks business to a private equity firm so it can focus on mobile broadband.

The Finnish-German joint venture is to sell the arm off to Marlin Equity Partners for an undisclosed sum in order to make the new company "a leading provider in the optical market."

The move was hailed by the company as one which will help bring the company further into line as a mobile broadband specialist, and will improve the "strategic focus" on core segments of the business.

It will be very difficult for the market to reach the two percent growth we have predicted for the year

The deal means that as many as 1,900 employees in Germany and Portugal will transfer into the new company, the firm said in a statement. California-based Merlin Equity Partners will headquarter the new firm in Munich, Germany and will be headed by its current management team with Herber Merz as chief executive.

“This transaction is very exciting for the business as it will give us the opportunity to build a long-term leader in optical and the strategic flexibility to be proactive in the market,” said Merz.

“We are making a major commitment to this sector, and have significant capital under management that we intend to use as a catalyst for consolidation,” said Nick Kaiser, a co-founder and partner at Marlin Equity Partners.

According to analysts, the competitive environment in the optical market is "challenging at the moment".

"Many vendors are grateful just to see their business stay flat," said Ron Kline, principal analyst network infrastructure, Ovum.

"It will be very difficult for the market to reach the two percent growth we have predicted for the year. Now is the time to position next-generation products with operators which will have no choice but to turn spending back on in 2013,” Kline added.

The deal is expected to complete in the first quarter of 2013. Restructuring of Nokia Siemens Networks is expected to net one billion Euros in cost savings.