How Nokia's chairman demanded €2bn from Steve Ballmer

News
10 Nov, 2015

Risto Siilasmaa reveals the Sunday evening phone call that netted him a massive loan from Microsoft's then-CEO

You'd need guts to take the reins at Nokia when it was stumbling into possible bankruptcy-- but imagine phoning Steve Ballmer at home and demanding €2 billion.

That's just what Nokia Chairman Risto Siilasmaa did while negotiating the sale of the company's phone division to Microsoft back in 2013 with the software giant's then-CEO.

Sillasmaa was interim CEO at the time, and now acts as chairman; he also founded Finnish security firm F-Secure. Speaking at Nexterday North in Helsinki, he proudly told attendees that Nokia's enterprise value is now 15 times what it was three and a half years ago.

"It's quite rare and unique to see such a deep transformation in such a short time," he said.

At the time Nokia and Microsoft were negotiating terms of the £4.6bn deal, Siilasmaa was also in talks to buy the remainder of Nokia Siemens Networks (NSN), but Nokia didn't have the cash and he couldn't get investors to help. "We couldn't even get meetings with these investors," he said, calling it a "very tough time emotionally".

Saying trust was the key to any negotiations, he said: "In the Microsoft negotiations, we had four moments when the negotiations broke down. And we always recovered, based on the trust that had been created."

In one instance, the deal was agreed between Siilasmaa and Ballmer, but the Microsoft board refused it. "This was a huge shock to everybody," he said. "We thought we had a deal. He thought he had a deal. His management team knew they had a deal. And suddenly we didn't have a deal. How do you recover from that?"

Sillasmaa said there's only one way: restart the negotiations from the beginning, and don't get hung up on what was already discussed.

As the talks resumed, Nokia had the chance to acquire the half of NSN that it didn't own. "this was a very interesting opportunity as after selling the handset business, Nokia would be without a business," he said. "It would be a shell with lots of money."

Saw an opportunity to buy it at a "nice price" of €3.4 billion, a steal of a deal given analysts valued it at between €6 and €10 billion.

The only problem was, Nokia didn't have the cash and didn't have access to investors. "So I called Steve Ballmer one Sunday evening."

The two teams already had a meeting lined up for the next weekend to discuss the deal. And Sillasmaa told Ballmer: "Unfortunately, I have to tell you I have five preconditions for that meeting, which you have to agree to those conditions before we can have that meeting."

"And one of those conditions was that he would loan us €2bn," Sillasmaa said. "And he would have to loan those funds to us regardless of whether we make a deal with him on the handsets or not."

Ballmer agreed to €1.5bn. "And we had the funding to do the NSN deal," said Sillasmaa, giving Nokia a "core" to continue on as one of Finland's most famous companies. 

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