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(Adds CEO, analyst comment.) By Gustav Sandstrom Of DOW JONES NEWSWIRES Telecom equipment vendor Nokia Siemens Networks said Monday it has agreed to pay $1.2 billion for the majority of U.S.-based Motorola Inc's (MOT) network equipment business in order to gain a stronger foothold in the important North American and Japanese markets. In a joint statement, the companies said they expect the deal to close by the end of 2010. Nokia Siemens is making the acquisition primarily to boost its position in key markets like the U.S. and Japan and gain access to new customers, but the deal will also provide economies of scale and synergies in areas such as mobile broadband, Chief Executive Rajeev Suri told Dow Jones Newswires Monday. Nokia Siemens, a joint venture between Finland's Nokia Corp. (NOK) and Germany's Siemens AG (SI) said it expects the transaction to strengthen its business relationships with a number of telecom operators including China Mobile Ltd. (CHL), Sprint Nextel Corp. (S) and Vodafone Group PLC (VOD). As a result of the deal, Nokia Siemens expects to become the largest foreign wireless gear vendor in Japan, the third-largest in the United States, and to strengthen its number two position in the global infrastructure segment. Sweden's Telefon AB L.M. Ericsson is currently the world's largest network equipment vendor, ahead of Nokia Siemens, Paris-based Alcatel-Lucent (ALU), and China's Huawei Technologies Co. The Motorola acquisition would provide much-needed economies of scale for Nokia Siemens, said analyst Sylvain Fabre at research firm Gartner, adding that the telecom gear industry has long been ripe for consolidation. He said, however, that the integration will be a distraction for the company, which itself has been through an extensive integration process since its creation around three years ago. Still, CEO Rajeev Suri said the Motorola takeover should be uncomplicated in comparison. "I don't think this is anywhere close to the integration we have been through," he told Dow Jones Newswires. Approximately 7,500 employees are expected to transfer to Nokia Siemens Networks from Motorola's wireless network infrastructure business when the transaction closes, the companies said. Nokia Siemens' parent company Siemens AG said in a statement it believes the acquisition will boost the joint venture's global presence and create significant synergies. Siemens and Nokia will support the deal by transferring a shareholder loan of EUR250 million each into preferred equity, it said, but added that the acquisition will be fully funded by Nokia Siemens. Motorola's decision to break up the company through the sale of its network equipment business was demanded by activist investor Carl Icahn and aims to increase the company's market value. The company hopes it will force analysts to assess the cellphone and cable set-top boxes businesses separately from the remainder of the company, which makes public-safety equipment and handheld scanners. Nokia Siemens has made no secret of its ambitions to enter the U.S. market. Last year, it bid for two units of bankrupt Nortel Networks Corp., only to lose the bulk of the wireless-equipment business to Sweden-based market leader Telefon AB L.M. Ericsson (ERIC) and Nortel's metro ethernet unit to U.S.-based Ciena Corp. (CIEN). Under the deal announced Monday, Nokia Siemens will take over most of Motorola's network equipment assets such as its GSM and CDMA business, while Motorola will retain control of the less widespread iDEN technology and a number of other assets such as network infrastructure related patents. The acquisition will boost Nokia Siemens' position in the important U.S. market and give it access to a network of new customers who may later choose the vendor for fourth-generation network upgrade deals, said Redeye analyst Greger Johansson. Meanwhile, analyst Pierre Ferragu at Bernstein said the valuation of Motorola's assets looks fair, at 0.3 to 0.5 times sales. The deal should be positive for Nokia Siemens as the wider network equipment industry consolidates, he added. At 1437 GMT, shares in parent company Nokia were up 0.3% at EUR6.79, against a 0.2% drop in the wider Helsinki market. -By Gustav Sandstrom, Dow Jones Newswires; +46-8-5451-3099; gustav.sandstrom@dowjones.com (Archibald Preuschat in Duesseldorf contributed to this story.) (END) Dow Jones Newswires July 19, 2010 10:46 ET (14:46 GMT)