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Nokia Sells Mapping Service to German Automakers

The Finnish telecommunications company continues its makeover and reconstruction, moving HERE maps to BMW, Audi and Mercedes-Benz for a little more than $3 billion.

FRANKFURT, Germany — German car makers BMW, Audi and Mercedes-Benz have teamed up to buy digital mapping service HERE for 2.8 billion euros ($3.07 billion) from Nokia, the Finnish telecoms group said Monday.

The sale “should be concluded in the first quarter of 2016,” Nokia said in a statement, adding that it expected net proceeds from the deal of just over 2.5 billion euros ($2.74 billion). 

The three German luxury car makers, which were already clients of HERE, said in a separate statement that they would hold equal shares in what would be an unprecedented type of partnership in the sector.

“HERE is laying the foundations for the next generation of mobility and location-based services,” they said, adding that HERE’s technology would eventually be used in self-driving cars.

The companies touted HERE’s maps of nearly 200 countries in more than 50 languages as being able to use “swarm intelligence” to provide constant updates on hazards such as icy roads, accidents and traffic jams.

The joint acquisition, which will have to be approved by competition authorities, is aimed at maintaining HERE’S products and services “as an open, independent and value-creating platform” in the automotive industry and other sectors, the car makers added.

Nokia paid $8.1 billion in 2008 (the equivalent of $8.89 billion today and about $11.53 billion at the time of the sale in October 2007) for U.S. digital map provider Navteq, one of the firms that merged to create HERE, a direct competitor of Google Maps. The German acquisition deal had been in the works for months.  

Although much less familiar to consumers than its rival, HERE has a solid list of industrial and Internet clients, including Facebook and Amazon, and its maps are used by four of every five cars in Europe and North America with integrated GPS.

‘They didn’t want to be dependent on Google or Microsoft’

Formerly the top company in the mobile phone sector, Nokia aims now to focus on network equipment and is working on a return to the handset business, which it sold to Microsoft in 2013.

Nokia struck a 15.6 billion euro ($17.12 billion) deal in April to buy its rival Alcatel-Lucent to create the world’s biggest supplier of mobile phone network equipment. It also expects to finalize that deal in the first half of 2016. 

The taxi app Uber told The New York Times in May that it had made a $3 billion offer for HERE.

Analysts said Nokia could be happy with the sale price.

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“Nokia paid a very high price for the service then (by buying Navteq in 2008), but that was a long time ago,” equity strategist Kristian Tammela of Nordea Bank Finland told AFP. “Back then, they paid too much, but now the price is reasonable.”

Mikael Rautanen of equity research firm Inderes said it was the right acquisition at the right time for the German car makers. “It is a good deal — and, above all, strategically important for them. The biggest threat for them was that HERE would be sold to Silicon Valley. They don’t want to be dependent on players like Google or Microsoft,” Rautanen told AFP.

He noted that digital services are transforming the car market. 

“In the future, carmakers won’t differ from each other so much by their motor or by their design, but rather by the services that come with their cars,” Rautanen said. “Let alone driverless cars, which will very quickly become a part of everyday life.”

London-based IHS Automotive said the acquisition could spur the establishment of a “de facto standard” in the industry, spurring high-tech development.

“The consortium model has many benefits for the industry,” the group said in a statement including the ability to combine resources to secure and continue developing a long-term strategic resource.”

By Estelle Peard

Copyright Agence France-Presse, 2015

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