Psion shareholders approve Symbian/Nokia deal

Nokia took another step forward in its effort to acquire Psion's stake in operating system developer Symbian after Psion...

Nokia took another step forward in its effort to acquire Psion's stake in operating system developer Symbian after Psion shareholders approved the deal on Friday.

In February, Psion announced its intention to sell Nokia its 31% stake in the wireless operating systems business Symbian, which would make Nokia the majority shareholder of Symbian, bumping its share from 32.2% to as high as 63.3%. For that, Nokia would pay Psion a fixed sum of £93.5m and a variable payment of 84p for each Symbian OS-based device sold during 2004 and 2005.

Even though a third of shareholders in Psion, including the Phoenix Asset Management investment group, which owns a 13% stake in Psion, moved to block the deal, the majority gave the agreement a green light after a three-hour extraordinary general meeting in London. 

The the Psion vote is seen as a positive outcome for Nokia, although there is still a long way to go before the whole thing is sorted out, according to Chris Jones, a senior analyst at "It still remains to be seen what the other Symbian shareholders will do," he added.

Nokia has to gain regulatory approval to complete its purchase of Psion's share in Symbian in Finland - which it acquired on Thursday - as well as Germany and Austria. Assuming Nokia is granted such approvals, there will be a seven-week period under which Symbian's other shareholders can exercise their pre-emption rights to buy a portion of Psion's stake in Symbian.

Other Symbian shareholders include Panasonic, Samsung, Siemens, Sony Ericsson and Ericsson. Psion's sale of its Symbian shares faces a regulatory deadline of 13 November, although the company hoped to finalise the deal by June.

If all of the other Symbian shareholders decides to purchase their share of Psion's Symbian stake, Nokia's overall share of Symbian after the completion of the deal would be 46%.

Sony Ericsson said it was considering the possibility of increasing its share in Symbian, while representatives from Panasonic, Samsung and Siemens could not be reached for comment.

"Individually and, more importantly, collectively, it is in the interests of the other Symbian shareholders to take advantage of their pre-emption rights and keep Nokia from gaining a majority share in Symbian," said Ovum analyst Julian Hewett. "I'm sure they are all talking together about that option now."

All five companies indicated last month that they had been assured by Nokia that Symbian would continue to be run as an independent entity. As such, they would not, for the time being, jump ship as Motorola did last August when it sold its 19% stake in Symbian to Nokia and Psion.

"There has always been something of an awkward situation in that Nokia's biggest competitors are also its partners in Symbian, but it is probably in the best interest for all involved to keep Symbian going because it is such a giant in the market," Jones said. "It's also in Nokia's best interest to keep Symbian independent."

Hewett also agreed that Nokia would be best served by a Symbian that has the perception in the market of having some independence from the market dominator Nokia.

"Symbian already has close to 100 percent of the smartphone market worldwide, and though Microsoft is expected to make inroads, it will be an uphill climb for them," Hewett said.

Although most new mobile devices using Symbian had been launched by Nokia, competitors are rapidly coming out with their versions of Symbian-based devices. Last month, Panasonic released the X700, while Motorola launched the A1000, both using Symbian. LG Electronics last month licensed Symbian OS as its platform for development of smartphones for 2.5G and 3G networks worldwide.

Laura Rohde and Joris Evers write for IDG News Service

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