Exilion, a real estate investment firm, is in discussions to acquire Nokia's head office building in Espoo, Finland, making headlines. The prominent handset maker, Nokia, has confirmed ongoing talks with Exilion regarding the sale of its headquarters.
The real estate investment firm is poised to acquire the Nokia Head Building for approximately 170 million Euros, equivalent to about ₹1218 Crore. This divestment of real estate assets aligns with Nokia's broader strategy to reduce operational costs.
Lease-Back Agreement
Nokia has specified that the divestiture of the Nokia Head Building will be structured around a long-term lease agreement. Following the sale, the Finland-based real estate investment firm will lease the building back to Nokia. Company officials anticipate completing the transaction by the end of the current year.
Strategic Shift
Nokia CFO Timo Ihamuotila stated that owning real estate assets is not a strategic priority, emphasizing that it falls outside the company’s core business activities. In regard to divesting real estate assets, Ihamuotila clarified that they are categorized as non-core assets for Nokia.
Building History
Nokia has operated from this building since 1997. The Nokia Building encompasses 48,000 sq. meters of office space. Architect Pekka Helin designed the building, which is located in Keilaniemi, Espoo.
Mr. Ihamuotila conveyed that Nokia is satisfied with the arrangement. Nokia will sustain its operations in the building under a long-term lease agreement, despite the change in ownership.
Market Challenges
The Finnish handset maker has encountered significant competition from smartphone giants like Samsung and Apple. Nokia ceded its market leadership to Samsung. The company has been strategically launching products based on Microsoft’s Windows platform and operating systems such as Belle.
Previously, Nokia announced the closure of its facilities in Ulm, Germany, and Burnaby, Canada, as part of its restructuring efforts. Additionally, Nokia sold its luxury brand, Vertu, to EQT, a private equity firm.
Restructuring Initiatives
Nokia's announcements detailed a plan to eliminate 10,000 jobs globally by the end of 2013, viewed as an integral component of the restructuring process. Experts attribute this real estate transaction to the decline in Nokia product sales.