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Nokia postpones deal because of Siemens bribery probe

Investigation leads companies to put off merger of their wireless-equipment units until March.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
Cell phone maker Nokia and telecommunications equipment maker Siemens are postponing the merger of their mobile-network units because of an ongoing investigation into allegations of bribery at Siemens.

The deal, which will create a new company called Nokia Siemens Networks, was supposed to be finalized January 1, 2007. But in a press release Thursday, Nokia said it expects the deal to close in March.

Nokia said it is postponing the deal because it is concerned about the ongoing bribery investigation that has already led to the arrest of several former Siemens employees, including Thomas Ganswindt, former head of the German company's telecommunications equipment division.

"In light of the current investigations of Siemens, the scope of which includes the carrier-related business to be transferred to the new company, Nokia and Siemens intend to adjust their agreements in order to have Siemens conduct an appropriate compliance review prior to closing of the transaction," the company said in a statement. "This adjustment is an addition to the previously agreed closing conditions. Nokia will participate actively in the review."

Siemens and Nokia, based in Finland, announced plans to merge their wireless-equipment divisions in June. The new company would combine wireless products from both companies that are sold to telephone operators.