German carmakers lead $3.5bn race to buy Nokia mapping unit
Andy Sharman, Daniel Thomas and Arash Massoudi
The race to acquire Nokia Here has entered its final stages, with a consortium of three German carmakers in pole position to acquire the highly-prized mapping business.
According to several people familiar with the matter, a group of three German carmakers — BMW, Daimler and Audi, a unit of Volkswagen — last month tabled a second-round bid for the business, which bankers say could sell for as much as €3.5bn.
At least one other bidding group is thought to be in the running, made up of North American private equity companies.
No decision between the rival groups has been made by Nokia, which is conducting a wide-ranging strategy review. The Finnish group has not committed to selling the unit, having made it clear to bidders that it would only offload Here if the price offered met its expectations.
But people familiar with the matter said the likelihood that Nokia would sell the asset was more than 90 per cent. It has, however, discussed with bidders the potential of keeping a small stake in the company, according to two of the people.
Nokia declined to comment. Daimler and Audi declined to comment. BMW did not respond to requests for comment.
The Here division is seen as non-core to the wider telecoms business, which has rapidly moved away from consumer devices towards infrastructure. Nokia is in the process of completing a €15.6bn all-share takeover of Alcatel-Lucent.
The carmakers want to get their hands on the unit’s high-definition mapping software not only because it powers the navigation systems in vehicles made by almost all of the top 20 manufacturers, but because it is crucial to the operation of autonomous cars, which require a deep understanding of their surroundings to function.
The Here unit, which earns well over half its €944m in annual sales from the car industry, is running 10 automated driving projects with leading manufacturers.
Nokia’s maps also provide the basis for a number of the connected-car services that carmakers hope will eventually provide a fresh source of revenues. These include concierge services — such as hotel bookings — as well as traffic updates and roadside assistance.
Numerous parties have been linked to the bidding process, including Uber and Baidu, sparking fears among carmakers that they could lose access to a vital piece of technology.
“It’s not so much about the having GPS system,” said one motor industry analyst. “It’s about not having the GPS system.”
Here is working on technology that would enable maps to be built in real-time, with the cameras and sensors delivering updates to the cloud. Analysts say that only Google and TomTom can rival Here’s coverage and detail.
Here — which was known as Navteq when it was bought by Nokia in 2007 — is the leading map supplier to carmakers, ahead of TomTom. The company’s maps are in four out of every five cars sold in North America and Europe that have integrated in-dash navigation.
In 2014, more than 13m new cars were sold with the company’s maps on board — equal to total new car registrations in the EU last year.
Additional reporting by Chris Bryant