Microsoft and Nokia have agreed a deal that’ll see Microsoft buying almost all of Nokia’s Devices & Services business, including the Mobile Phones and Smart Devices business units as well as the Lumia brand. It’ll also license Nokia’s patents and use Nokia’s mapping services.

The deal will cost Microsoft a total of €5.44 billion (£4.6 billion); €3.79 billion for the Devices & Services business and €1.65 billion to license Nokia’s patents. It’s expected to be completed early next year, subject to shareholder and regulatory approval.

Stephen Elop, Nokia’s President and CEO, will become Nokia Executive Vice President of Devices & Services. He’s stepping down from the board of directors until the transaction is completed. Risto Siilasmaa, who’s Chairman of the Nokia Board of Directors, will become Nokia interim CEO. Approximately 32,000 people are expected to transfer to Microsoft.

Steve Ballmer, Microsoft’s outgoing CEO, said “It’s a bold step into the future - a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services. In addition to their innovation and strength in phones at all price points, Nokia brings proven capability and talent in critical areas such as hardware design and engineering, supply chain and manufacturing management, and hardware sales, marketing and distribution.”

Nokia will be left with operations that generated around half its net sales in 2012, including the recently-renamed NSN infrastructure business, HERE location services and the Advanced Technologies research unit.

[The Next Chapter: An open letter from Steve Ballmer and Stephen Elop]