The move will end a long-running saga for Finland's Nokia, which has seen its share of the mobile phone market eroded over the past few years by the likes of Apple and Samsung.
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It also paves the way for Nokia to announce a new chief executive, with the company's head of solutions and networks, Rajeev Suri, linked with the top spot.
Analysts said offloading its lossmaking devices arm would help stabilize Nokia.
"If you look at the past few years it has been a rollercoaster ride for Nokia," Sami Sarkamies, senior analyst at Nordea Markets, told CNBC in a phone interview. "We have seen huge disappointments in the handset business, but the new company will have a stable balance sheet and it will be holding profitable businesses."
Nokia's business has already changed direction several times during its lengthy history , which started in 1865 with the formation of paper-making company Nokia AB. Another firm called the Finnish Rubber Works was set up and manufactured rubber products such as tires and boots.
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At the beginning of the twentieth century, Finnish Cable Works was formed, the basis of Nokia's cable and electronics business. The three companies merged in 1967 as the communications revolution began to unfold.
Nokia's headquarters are in a Finnish city called Espoo, where it dominated the technology scene for several years. Recent job cuts and the shrinking of its business have been negative for the area, but other technology firms are filling the void.
Smartphone maker Jolla is one such company, with around 90 percent of its workforce made up of ex-Nokia employees. Angry Birds-maker Rovio is another key part of the Finnish technology landscape in Espoo, taking advantage of the area's technology expertise.
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