Nokia to acquire Navteq for $8.1 Billion

In what is one of the most significant technology acquisitions of the year Nokia has announced it is to acquire Navteq for $8.1 billion. Navteq is the leading provider of digital map information which is used in car navigation systems (e.g. BMW), mobile navigation devices (e.g. Garmin), Internet-based mapping applications (e.g. Google Maps), and government and business solutions. Nokia uses Navteq data in its own Nokia Maps product.

Navteq's only main competitor, TeleAtlas, is currently being acquired by TomTom, the mobile navigation device company. Nokia and TomTom's acqusitions represent the increasing interest and activity around locations and map based service. Nokia clearly feels its interest are best served by ensuring it has a guaranteed internal source of mapping and related geographical data for use in its push into internet and software services.

The acquisition underlines just how significantly Nokia sees its moves into software and internet services. It is Nokia biggest ever acquisition and has significant implications for the rest of location / mapping software and service industry. 

Last year Nokia acquired Gate5 and its Smart2Go mapping software. Smart2Go (now Nokia Maps) uses Navteq for it mapping and geographical data. Navteq is a complementary acquisition to gate5, they represent data and software front end respectively.

Outside of Navteq's existing business and revenue (approximately $500m last year with strong with expected for 2007) Nokia major gains from the acquisition will be a reduced time to market to integrate mapping and location functions into its other services and reduced licensing costs. Although the licensing fees Nokia currently pays for mapping data (e.g. for its Nokia Maps product) are relatively small they would have likely grown very significantly over the next few years. The acquisition may also be seen as defensive as Nokia sees mapping and location as a key future growth area and a cornerstone of its software and services strategy and it may wish too prevent a major competitor making the same move.

Press Release Extract: 

Espoo, Finland - Nokia and NAVTEQ today announced a definitive agreement for Nokia to acquire NAVTEQ.  Under the terms of the agreement, Nokia will pay $78 in cash for each share of NAVTEQ including outstanding options for an aggregate purchase price of approximately $8.1 billion (EUR 5.7 billion), or approximately $7.7 billion (EUR 5.4 billion) net of NAVTEQ existing cash balance. The acquisition has been approved by the board of directors of each company and is subject to customary closing conditions including regulatory approvals and NAVTEQ shareholders' approval. 

 

The navigation area is a fast growing business, and with location-based services expanding rapidly into mobile communications devices, the industry is poised for even further growth.  NAVTEQ brings a number of key assets to Nokia: a great team with best-in-world maps and navigation industry expertise, a strong customer base and an industry-leading map data and technology platform with the broadest geographical coverage.

 

NAVTEQ will continue to provide the most advanced and flexible map data platform to navigation industry players. With NAVTEQ, Nokia will further strengthen its location based services offering and bring to market the most innovative, context aware Nokia Internet services with accelerated time to market.

Navteq supplies data to a large range of companies. In the press release Nokia stressed that these companies would not be affected by the acquisition with Navteq operating independently (although organizationally it will be a Nokia Group company):

After completion of the transaction, NAVTEQ's current map data business will continue operationally independent, but organizationally a Nokia Group company. Judson Green will report directly to Olli-Pekka Kallasvuo. This will ensure that NAVTEQ's current and future customers continue to have a dedicated and strengthened unit serving them as before with digital map information for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, as well as government and business solutions.

Published by Rafe Blandford at 18:00 UTC, October 1st

Categories: Software, Miscellaneous, Developer, Industry, Editorial Thoughts
Platforms: General, S60 3rd Edition

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