Nokia shares popped higher Monday after the company bought Siemens out of their profitable joint venture in telecoms networks.
The Finnish company paid 1.7 billion euros ($2.2 billion) for Siemens(SI)' 50% stake in Nokia Siemens Networks, a move which broadens its range of strategic options and buys time as it attempts to revive its ailing handset business.
Nokia(NOK) has been searching for a way to return to profit after falling way behind rivals like Apple(AAPL) and Samsung(SSNLF).
Sales of its Lumia handset jumped 27% in the first quarter but group revenue plunged and it posted an operating loss of 150 million euros.
Nokia Siemens Networks, which competes with China's Huawei and ZTE Corp(ZTCOF), returned a healthy profit in the first quarter, helped by its focus on 4G Long Term Evolution (LTE) networks.
"Nokia Siemens Networks has established a clear leadership position in LTE, which provides an attractive growth opportunity," Nokia Chief Executive Stephen Elop said in a statement.
The Nokia Siemens Network price tag was lower than analysts were expecting and Nokia's Helsinki-listed shares jumped as much as 10% before trimming gains to stand around 7% higher at 3.05 euros.
"We also believe Nokia is acquiring this asset at a very attractive price, well below what an initial public offering or trade sale could bring in the future," Liberum Capital analysts said in a research note.
Nokia plans to announce a new name and brand for its networks equipment unit when the transaction closes during the third quarter of 2013.