German auto consortium close to buying Nokia maps for $2.7 bn
22 July 2015
A consortium of German car makers is close to finalising a deal to buy Nokia's high-definition mapping / navigation business called HERE for €2.5 billion ($2.7 billion), Bloomberg yesterday reported, citing people familiar with the matter.
BMW, Mercedes-Benz parent Daimler AG and Volkswagen's subsidiary Audi AG, who comprise the consortium, are now settling out issues such as patent rights and a deal may be announced by the end of the month, the report said.
Nokia had invited buyers for HERE in April, targeting $4 billion, which is far lower than the $8.1 billion it spent on buying Chicago-based map provider Navteq Corp in 2007 (See: Nokia to buy navigation software maker Navteq for $8.1 billion).
However, in April HERE was valued at about €2 billion ($2.1 billion), according to Nokia's financial reports.
Initially three consortia had placed bids for the HERE, including the consortium comprising of German automakers. The other two were US-based taxi operator Uber, which had teamed with China's Baidu. The third consortium was of Chinese media, mobile and internet services provider Tencent, Chinese map developer NavInfo and Swedish buyout firm EQT Partners AB.
The Uber-Baidu consortium and the consortium of Chinese media, mobile and internet services providers had, however, exited the bidding process, which placed the German car makers' consortium in a much stronger position to bargain with Nokia.
Backing off from a potential deal due to its high price has come as a big blow for Uber since the cab sharing service worked using geospatial-mapping data to pair riders with drivers, and getting its hands on HERE would have been like hitting a jackpot, say analysts.
Tencent, NavInfo, and EQT Partners AB had dropped out of the race after placing low bids.
HERE (formerly Ovi Maps), is a global leader in the mapping and location intelligence business offering maps for 196 countries, voice guided navigation in 97 countries in more than 50 languages and live traffic information for 41 countries.
Its maps are found in four out of five premium cars in North America and Europe with integrated in-dash navigation.
In 2013, more than 10 million new cars were sold with HERE maps on board. It also powers mobile devices, connected devices and enterprise solutions.
HERE had net sales of €970 million last year and an operating profit of €31 million.
Betting on a future full of self-driven cars and delivery drones, the German carmakers would need a mapping service capable of navigating in three dimensions, and would love an alternative like Nokia's HERE, especially if they have to compete with Google Maps or traditional navigation solutions like TomTom.
Early this week, HERE announced that it was developing high-definition map data of public roads in the US, Germany, France and Japan and would make it available to all carmakers to test on highly automated vehicles.