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Microsoft just bought a huge chunk of Nokia. The Redmond giant is in the process of purchasing all of Nokia’s Devices & Services business, and will license Nokia’s patents, including the company’s mapping services.

Microsoft will pay 3.79 billion euros to purchase Nokia’s Devices & Services business. The company is paying an additional 1.65 billion euros to license Nokia’s patents, for a total transaction price of 5.44 billion euros in cash.

Steve Ballmer (Chief executive officer, Microsoft):  It’s a bold step into the future – a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services.

Microsoft says it will draw upon its overseas cash resources to fund the transaction. The transaction is expected to close in the first quarter of 2014, subject to customary approvals and other closing conditions. 

Stephen Elop is stepping aside as Nokia president and CEO to become Nokia executive vice president of Devices & Services.  At closing, approximately 32,000 people are expected to transfer to Microsoft, including 4,700 people in Finland and 18,300 employees directly involved in manufacturing, assembly and packaging of products worldwide.

As part of the transaction, Nokia is assigning to Microsoft its long-term patent licensing agreement with Qualcomm, as well as other licensing agreements.

Nokia will retain its patent portfolio and will grant Microsoft a 10-year license to its patents at the time of the closing. Microsoft will grant Nokia reciprocal rights to use Microsoft patents in its HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement in perpetuity. In addition, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four-year license.

[Image courtesy: Microsoft]