Nokia-Siemens Pact Hindered by Bribery Probe

The planned merger of network infrastructure units at Nokia and Siemens won’t close by the end of this year as expected because the companies will execute a compliance review of Siemens, spurred by the corruption investigation currently shaking the German technology company.

Authorities across Europe have been investigating bribery charges at Siemens. Earlier this week, the former head of Siemens’ telecommunications equipment group—the one to be merged with Nokia’s networks unit—was arrested as part of the investigation.

The companies announced plans in June to merge the groups, creating a company called Nokia Siemens Networks that would have had combined revenues in 2005 of 15.8 billion euros (US$20.9 billion).

They said at the time that the deal would close by the end of the year and that the new company would begin operations in January. They now say they expect to close the deal and begin operations in the first quarter of 2007, meaning possibly as late as March.

Closing the deal depends in part on the result of a compliance review of the Siemens unit, which Siemens plans to conduct in the first quarter. The review will also produce a compliance program that the new company will implement.

Antitrust authorities in the United States and the European Union have already approved the merger, and the companies have announced many of the executives who will lead Nokia Siemens Networks. As recently as mid-November, the companies were saying they expected to begin their combined operations in January.

-Nancy Gohring, IDG News Service (Dublin Bureau)

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