Nokia on Monday agreed a €2.8 billion deal to sell its Here mapping business to a group of German car makers comprised of Audi, BMW and Mercedes parent Daimler.
"With this step we complete the latest stage of Nokia’s transformation. We integrated the former Nokia Siemens Networks, divested our Devices & Services business, and have now reached agreement on a transaction for Here that we believe is the best path forward for our shareholders, as w ell as the customers and employees of Here," said Nokia CEO Rajeev Suri, in a statement.
Under the terms of the deal, Nokia expects to receive proceeds of approximately €2.5 billion after the deduction of certain liabilities assumed by the buyers. The transaction is expected to close in the first quarter of 2016.
Audi, BMW and Daimler fought off alleged interest from Facebook, taxi-booking app maker Uber, and Chinese search giant Baidu, among others, in order to land Here.
In a joint statement, the car makers said that no member of the consortium will seek a majority stake in Here, and that they will offer mapping and location products any customer that comes calling.
"Here will be able to offer users a continuously improving product, bringing highly automated driving and location-based services a step further. As the volume of anonymised data from the vehicles increases, services will become more convenient, more connected and further tailored to the users’ individual requirements," said a statement attributed to board members from the three car makers.
"High-precision digital maps are a crucial component of the mobility of the future. With the joint acquisition of Here, we want to secure the independence of this central service for all vehicle manufacturers, suppliers and customers in other industries," added Daimler chairman Dieter Zetsche.
The sale of Here has been in the offing since mid-April, when Nokia announced a strategic review of its mapping division on the same day it struck a €15.6 billion deal to acquire rival kit maker Alcatel-Lucent.
The development raised eyebrows in some quarters given that Here is a growing business with an impressive list of customers, and has capabilities that may have the potential to benefit Nokia’s networking business. In addition, Nokia has ploughed serious cash into its mapping assets over the years, not least of which was the €5.7 billion acquisition of Navteq in 2008.
According to Nokia’s Q2 financial results, published last week, Here’s revenue grew to €290 million from €232 million a year earlier thanks partly to a 24% increase in licence sales for embedded car navigation systems.
Nevertheless, it remains a small contributor to Nokia’s overall revenue compared to its networks division, which generated Q2 sales of €2.73 billion.
"I believe today’s announcement is a very good outcome for Here, its customers and employees," said Here president Sean Fernback. "The new ownership structure of Here will allow us to accelerate our strategy, further scale our business and fulfil our intent to become the leading location cloud company across industries."
