The Motivation And Performance Analysis Of Microsoft’s Acquisition Of Nokia

In the morning of September 3,2013, Microsoft announced that it would pay $ 7.2 billion to acquire Nokia’s devices and services department, as well as a large number of licensed patent portfolios. After Google’s acquisition of Motorola Mobile in 2011, this is another major acquisition happening in the mobile terminal market. Now, there are three ecosystems in the mobile device market:the Apple ecosystem, the Google ecosystem and the Microsoft ecosystem. But for Microsoft, the completion of the acquisition is only a starting point for its strategic reform. We will regard Microsoft’s acquisition of Nokia as the research object in this paper, using knowledge to analysis the motivation and performance of the case from both theoretical and empirical aspects. We will also try to provide a reference for Chinese enterprises.Through the learning of cross-border M&A motivation theories:market power theory, economies of scale theory, under valuation theory and so on, we analysis the case of Microsoft’s acquisition of Nokia in depth. We find that, Microsoft corporation aims to break through the operating difficulties, to get operation synergies, to get patent portfolios and mapping services from the merger. In order to get the purpose of the case’s performance analysis, we establish an event window through event analysis method. We analysis the abnormal returns of both sides of the case and their competitor Google, and eliminate other factors through introduce the major events leak. The empirical results show that:both sides of the merger gain positive and significant cumulative abnormal returns, but their competitor Google’s is negative, which proves the efficient theory is the main motivation of the merger.To further analysis the problem, we introduce the case of Google’s acquisition of Motorola mobile. Through comparing the two case from three aspects:the contents, the motivations and the results, we find that although the two cases have many similarities, but because of the nature differences between corporate strategic objectives and market position etc., so the result of two cases will be different. Based on the above comparative analysis, we suggest that Microsoft corporation may pay more attention to the synchronization of strategic objectives, financial risks, technological innovation.Based on the theoretical analysis and empirical testing, this paper provides some recommendations for Chinese enterprises. It argues that Chinese enterprises should discern market trends of the times, seize the opportunities in a rapidly changing international environment; Chinese enterprises should also improve their core competitiveness through strengthening technological innovation; they should identify their position in the market and formulate the strategic development goals, be cautious when to get the goal of market expansion using M&A methods.