Nokia confirmed it will sell its HERE maps unit to a German motoring consortium made up of BMW, Audi, and Mercedes for around 2.5 billion euros ($2.8 billion). According to Nokia, the transaction is expected to close in the first quarter of 2016 and is subject to regulatory approvals.
Companies like Baidu and Uber were initially said to be amongst the potential buyers of Nokia’s digital mapping and location services business, albeit in recent weeks the German automakers emerged as leading acquirers, and perhaps, the only bidders.
Since Nokia’s maps are extensively used, the business is quite expensive due to the constant need for collecting newer and more detailed map data. As a result, very few companies were interested in buying it, even though its data is seen as significant.
Nokia Sells HERE Mapping Business
HERE is an intelligent mapping system that is widely used in self-driving cars that are linked to wireless networks to perform certain functions such as recalculating a route.
The purchase will see the consortium of the three German carmakers holding an equal stake in the maps business that has impressed ever since its launch. The Finnish company said on Monday, the deal has an enterprise value of 2.8 billion euros, including liabilities worth nearly 300 euros for which Nokia will compensate with the carmakers.
The real question is, will the carmakers keep Nokia’s maps for themselves or make money will licensing it to others? The carmakers insist, the technology will remain broadly available. HERE is used by almost all notable carmakers, as well as Amazon, Microsoft, Samsung and a few other tech companies. It’s unclear how rival carmakers may respond to the acquisition by Germany’s carmakers.
The carmakers, in a press release announcing the purchase said that:
“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. The management of Here will continue to be independent — with the goal of moving the Here business case forward as a platform, open to all customers. The consortium will not interfere into operational business.”
Once the HERE deal closes, Nokia will have only two remaining businesses – Nokia Networks equipment unit and a small technologies operation based on brand licensing, patent licensing and new ventures – one of which is a recently announced virtual reality camera.
Nokia hopes to find the right hardware partner to roll-out new phones starting next year. Nokia Networks is set to close its Alcatel-Lucent deal ahead of the schedule.
HERE Mapping Business is a primary competitor is Google Maps.
