Nokia Corp. NOK has finally reached an agreement with a consortium of German automakers consisting of BMW, Daimler and Volkswagen (owner of Audi) and private equity firm General Atlantic to sell its HERE high-definition mapping/navigation business. Total consideration of the deal is Euro 2.8 billion (approximately $3.1 million). Nokia expects to receive Euro 2.5 billion as net proceeds after adjusting the Euro 300 million of liabilities for the HERE division.
Initially, three consortiums had placed bids for the HERE unit. Beside the consortium of German automakers, U.S.-based taxi operator Uber and China’s Baidu have formed a consortium to bid for HERE. The third consortium has been formed by Chinese media, mobile and Internet services provider Tencent, Chinese map developer NavInfo and Swedish buyout firm EQT Partners AB.
However, the Uber-Baidu consortium and the consortium of Chinese media, mobile and Internet services providers have exited the bidding process. This places the German automaker-backed consortium at much stronger position to bargain with Nokia for HERE. Initially, Nokia was expecting to receive a value of €2 billion – €4 billion (about $2.2 -$4.4 billion) for the HERE segment.
Major competitor of HERE is the Google Inc.’s GOOGL map business. Some analysts have estimated that self-driven and connected car services could become a $50 billion market opportunity in near future. The HERE deal is expected to be closed in the first quarter of 2016 subject to customary regulatory approval.
Over the last couple of years, Nokia has been restructuring its entire business model. In 2014, the company sold its mobile device and service division, which was its largest business unit, to Microsoft Corp. MSFT for $7.2 billion. After the disinvestment of the HERE division, Nokia Networks, which provides wireless infrastructure gears and solutions, will be the sole business of the company. Meanwhile, the proceeds from the HERE sale will be utilized for Nokia’s proposed acquisition of Alcatel-Lucent ALU for a total consideration of €15.6 billion (around $17.2 billion).
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