Microsoft To Buy Nokia Mobile Business In $7.1 Billion Blockbuster Deal

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Microsoft late Monday struck a deal aimed at reshaping the battle lines in the smartphone era by moving to buy Finnish smartphone giant Nokia's devices and services business in a $7.1 billion deal.

The deal would provide Microsoft with a smartphone business that has struggled to compete against rivals Samsung and Apple.

[Related: The Next Microsoft CEO? 10 Potential Candidates To Replace Ballmer]

Nokia CEO Stephen Elop, a former Microsoft executive who has been touted as one of the leading candidates to replace Microsoft CEO Steve Ballmer, will rejoin Microsoft upon completion of the deal.

The Nokia deal comes only six days after Ballmer announced that he plans to step down as CEO sometime over the next year.

The deal would add about another $20 billion in sales to Microsoft's top line ($14.9 billion euros) from Nokia's phone business and approximately 32,000 employees to the Microsoft payroll. That would make Microsoft a $100 billion behemoth with a significant phone business and 131,139 employees.

Approximatley 18,300 Nokia employees involved in manufacturing and assembly of Nokia products and 4,700 people in Finland are expected to be transferred to Microsoft if the deal is completed.

"It's a bold step into the future -- a win-win for employees, shareholders and consumers of both companies," said Ballmer in a prepared statement. "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."

Ballmer said Nokia will bring Microsoft "innovation and strength in phones at all prices points" along with "proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management and hardware sales, marketing and distribution."

For solution providers, the deal raises the ante yet again as to what role they will play as Microsoft recasts itself to compete in a services and devices era. They say Microsoft has struggled to provide a clear channel strategy in this new era, refusing to allow the vast majority of solution providers to sell the Microsoft Surface tablet.

Partners say it is critical that a new Microsoft CEO bring a more partner-centric model to the company's devices and services makeover.

Under the terms of the deal, Microsoft will pay $5 billion to purchase nearly all of Nokia's mobile devices and services business and another $2.18 billion to license Nokia's patent portfolio.

The two companies said they expect the deal, which must still be approved by Nokia's shareholders and regulatory agencies, to close in the first quarter of 2014.

NEXT: The Financial Impact Of The Deal On Microsoft, Nokia

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