Nokia has agreed to grant the new company an exclusive global license to create Nokia-branded phones and tablets for the next ten years.
In return, Nokia will receive royalty payments for all sales of Nokia-branded devices covering both brand and IP rights.
Microsoft has meanwhile conditionally agreed to sell its feature phone business to HMD and Foxconn's FIH Mobile for $350 million. With the deal, HMD will also acquire related design rights from Microsoft. This transaction is expected to close in the second half of the year.
FIH is acquiring assets from Microsoft including device manufacturing, sales and distribution. HMD and FIH then plan to collaborate to build a global business for Nokia-branded mobile devices.
With the moves HMD will become the sole global licensee for all Nokia-branded mobile devices, and plans to produce a full range of feature phones, smartphones and tablets. The new company plans to invest over $500 million in the next five years to support its foray into the market.
After the Microsoft transaction closes, HMD Global will be led by Arto Nummela, a former Nokia executive who is currently the head of Microsoft's mobile devices business for APAC and MEA, as well as Microsoft's global feature phones business.
Fellow former Microsoft executive Florian Seiche, now SVP for Europe sales and marketing at Microsoft Mobile, will also join the company as president.
“Branding has become a critical differentiator in mobile phones, which is why our business model is centered on the unique asset of the Nokia brand and our extensive experience in sales and marketing,” Nummella said.
“We will work with world class providers in manufacturing and distribution to move quickly and deliver what customers want."