Microsoft is selling its feature phone assets to a subsidiary of Taiwanese firm Foxconn Technology and newly-established firm HMD Global for $350 million, the company announced on Wednesday, in a move that will see Nokia devices return to the market.
The deal will see Microsoft transfer all of its feature phone assets, including brands, software and services, customer contracts and supply agreements to Foxconn subsidiary FIH Mobile to HMD Global. Around 4,500 employees will also transfer over to or have the opportunity to join either company.
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FIH Mobile Taiwanese firm will also acquire Microsoft Mobile Vietnam – the company's Hanoi-based manufacturing facility.
Microsoft will continue to develop its Windows 10 Mobile operating system and support its Lumia brand of phones and devices from partners such as Acer and Alcatel that run Windows phones.
The transaction is expected to close in the second half of 2016 subject to regulatory approvals and other closing conditions, Microsoft said.
HMD Global is a recently-founded company headquartered in Helsinki, Finland, and run by former Nokia and Microsoft executive Arto Numella.
The company said on Wednesday it had signed a licensing agreement with Nokia Technologies – Nokia's licensing unit – that gives HMD the sole use of the Nokia brand on mobile phones and tablets worldwide for the next decade, as well as key cellular patents.
HMD also said that it has conditionally agreed to acquire the rights to use the Nokia trademark on feature phones from Microsoft until 2024 and the design rights relating to Microsoft's feature phone business.
All of these deals will make HMD the "sole global licensee" for all types of Nokia-branded mobile phones and tablets.
HMD also said it signed an agreement with FIH and Nokia Technologies to allow it full operational control over sales, marketing and distribution of Nokia-branded devices. HMD will also have access to FIH's manufacturing and engineering capabilities, mobile technology, and distribution network.
It's important to note that Nokia will not be manufacturing these devices but instead licensing its intellectual property, a move it said was on the cards when the time was right. Nokia will receive royalty payments from HMD for sales of Nokia-branded mobile products.
HMD said it will invest over $500 million over the next three years "to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business".
"We will be completely focused on creating a unified range of Nokia-branded mobile phones and tablets, which we know will resonate with consumers. Branding has become a critical differentiator in mobile phones, which is why our business model is centered on the unique asset of the Nokia brand, and our extensive experience in sales and marketing," Arto Nummela , CEO of HMD global, said in a press release.
The sale by Microsoft marks a further pullback from its mobile phone business, one of the struggling areas of the company, since it purchased Nokia's mobile device unit in 2014 for $7.2 billion. Windows Phone had just a 2.2 percent market share globally in 2015, according to IDC.
Microsoft has shifted its mobile strategy focusing on its flagship Lumia devices and business phone. But as a company, it has been pushing other areas such as cloud and the . Last year, Microsoft wrote off its entire purchase of Nokia and announced 7,800 layoffs, mostly in the phone division.