By Friedrich Geiger
Germany's biggest auto makers have clinched a deal to buy Nokia
Corp's digital mapping business, beating out rival bidders for some
of the vital technology for self-driving cars in a EUR2.8 billion
($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, as the auto
industry and Silicon Valley technology companies jockey for
position to develop and equip the next generation of cars. Nokia
Here generated more than half its EUR970 million in 2014 sales from
the auto industry, and the rest from location-based services.
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 EUR2.5 billion with the buyers taking on
EUR300 million in Nokia Here debt. Nokia said it would book a gain
of EUR1 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 Berin, is a main provider of mapping
services with data on nearly 200 countries. It provides makers of
navigation devices and cars as well as websites and apps with the
data.
High-precision digital maps are vital for future self-driving
cars because these require an up-to-date plan 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 after it agreed to buy
Alcatel-Lucent and focus on 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 cars by
volume.
The car makers feared that Nokia Here's technology-the most
advanced digital map 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 car that are vital to self-driving cars and
future automotive safety systems
BMW, Audi and Daimler 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 buys said that Nokia Here's management would retain its
autonomy with the company continuing to serve rival car makers.
Nokia Here earned an operating profit of EUR28 million from
revenues EUR552 million in the first half of the year. The unit had
6,454 employees at the end of June.
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.
Write to Friedrich Geiger at friedrich.geiger@wsj.com
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