Reuters reported that the deal is expected to close in the first quarter of 2014 and is subject to approval by Nokia's shareholders and regulatory approvals. Nokia partnered in 2011 with Microsoft and uses Microsoft's Windows software to run its mobile phones.
Nokia was struggling to respond to the challenge from other mobile companies
"It's a bold step into the future - a win-win for employees, shareholders and consumers of both companies," Microsoft's outgoing CEO, Steve Ballmer, said in a statement. "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,"he added
Nokia said in a statement Elop, along with their senior executives, would transfer to Microsoft when the deal was concluded but it did not say what roles they would take at Microsoft. Nokia board chairman Risto Siilasmaa would take over CEO duties while the Finnish firm looked for a new CEO, it said.
Finland's Nokia, once the undisputed leader in mobile phones, has been struggling to respond to the challenge from smartphone makers such as Apple and Samsung.