Tech Industry

Nokia's troubled India plant won't be part of Microsoft deal

Microsoft will, however, sign a services agreement with Nokia to continue to develop products at the plant, the company says.


Nokia's Chennai manufacturing plant in India won't be part of its deal with Microsoft, the company said Thursday.

A Nokia spokeswoman told Reuters "it's highly unlikely that the plant will transfer" to Microsoft. If that indeed becomes the case, Microsoft will enter into a service agreement with Nokia to produce phones at the Chennai plant.

"We are aware that Nokia has communicated to their employees that the factory may not transfer due to the liens in place," a Microsoft spokesperson told CNET in an e-mailed statement. "The Microsoft and Nokia corporate teams continue to work together to close this deal on April 25 as announced earlier this week. We can share more details on April 25 after the deal closes."

The facility has become a major headache for the Finnish company. Earlier this year, India's tax officials raided the plant and hit Nokia with back taxes to the tune of $500 million. Nokia is currently battling the levy in court, but since its deal with Microsoft is set to close on Friday, it's unlikely that anything will change and Microsoft will be able to acquire the facility.

The $7.2 billion acquisition includes Nokia's Devices division, along with some other facets of the business. After the deal is done, Nokia will remain in business, operating other aspects of its operation.

Reports swirled earlier this week suggesting HTC would consider buying the Chennai plant if Nokia puts it up for sale. HTC told CNET in an emailed statement, however, that it has no plans to acquire the facility, and the plant itself is not up for sale.

CNET has contacted Nokia for comment on the report. We will update this story when we have more information.

Updated 9:28 a.m. PT to include Microsoft's statement.