Luxury Automakers BMW, Daimler and Audi Clinch Purchase of Nokia’s Maps Business

German car makers to acquire Nokia Here in deal worth $3.1 billion 

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Germany’s biggest auto makers have clinched a deal to buy Nokia Corp. digital mapping business, beating out rival bidders for some of the vital technology for self-driving cars in a $3.1 billion acquisition.

The deal is a coup for BMW AG, Audi AG and Daimler AG, the front-runners to buy the business for some weeks now, as the auto industry and Silicon Valley technology companies jockey for position to develop and equip the next generation of vehicles. Nokia Here generated more than half its €970 million in 2014 sales from the auto industry, and the rest from location-based services.

The Wall Street Journal reported the car makers were on the verge of a deal to buy the business last month.

Nokia, the Finnish telecom group which sold its mobile handset business to Microsoft Corp. last year, said on Monday it would receive proceeds of around €2.5 billion with the buyers taking on €300 million in Nokia Here debt. Nokia said it would book a gain of €1 billion. Nokia had built the business out of Navteq, a mapping service that it bought in 2008 for $8.1 billion.

Nokia Here based in Berlin, Germany, is a main provider of mapping services, with maps for 131 countries as well as other data. It provides makers of navigation devices and cars as well as websites and apps with its data. High-precision digital maps will be absolutely vital for self-driving cars which require up-to-date information of a vehicle’s surroundings, exact to the nearest centimeter.

The German car makers entered the bidding after Nokia announced in April that it was considering a sale, having agreed to buy Alcatel-Lucent and focus on making telecom equipment, people familiar with the situation said. BMW, Volkswagen AG’s Audi, and Daimler’s Mercedes-Benz are the world’s leading makers of luxury vehicles by volume.

The automakers feared that Nokia Here’s technology--including the most advanced digital maps of the world’s major road networks--could fall into the hands of Google Inc., Uber Technologies Inc. or Apple Inc.That would put auto makers at risk of losing control of information systems inside the vehicle. BMW, Audi and Daimler said they will each hold an equal stake in Nokia Here.

“The acquisition is intended to secure the long-term availability of Here’s products and services as an open, independent and value-creating platform for cloud-based maps and other mobility services accessible to all customers from the automotive industry and other sectors,” said BMW, Audi and Daimler in a joint news release.

The buyers said that Nokia Here’s management would retain its autonomy with the company continuing to serve rival car makers.
Nokia Here made operating profit of €28 million from revenue of €552 million in the six months to end-June when it some 6,454 employees.

The car makers said they expect the transaction to be closed in the first quarter of 2016, subject to approval of the relevant antitrust authorities.

by Friedrich Geiger - The Wall Street Journal


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