German carmakers buy Nokia maps to fend off digital rivals

Mon Aug 3, 2015 2:12pm EDT
 
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By Edward Taylor and Eric Auchard

FRANKFURT (Reuters) - German carmakers BMW (BMWG.DE: Quote), Audi (VOWG_p.DE: Quote) and Mercedes (DAIGn.DE: Quote), will pay around 2.5 billion euros ($2.8 billion) to buy Nokia's maps business, beating out high-tech rivals for location services seen as key to the future of self-driving cars.

Germany's three premium carmakers will hold equal stakes in the business, known as HERE, clubbing together to keep the assets away from Internet rivals such as Uber [UBER.UL] of Silicon Valley and China's Baidu (BIDU.O: Quote) and Tencent (0700.HK: Quote).

The deal has an enterprise value of 2.8 billion euros, including liabilities of nearly 300 million euros, for which Nokia will compensate the carmakers, the Finnish company said on Monday. The transaction is expected to close in early 2016.

The purchase allows automakers to offer new premium features, like autonomous driving, in luxury cars, shaking up the pecking order between car makers, their parts suppliers and software rivals like Uber, Google (GOOGL.O: Quote) or Apple (AAPL.O: Quote).

"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," said Chief Executive Dieter Zetsche of Daimler, which invented the motor car in 1886.

But it is unclear how other HERE customers, including rival carmakers, may respond to Germany's carmakers owning map technology, which many in the automotive, Internet and logistics industries see as key to their own strategies.

"There is a risk that the other automakers will be pushed further into the arms of Google," said Richard Windsor an independent financial analyst who tracks major tech players.

HERE's primary competitor is Google Maps.   Continued...

 
A view of Nokia's annual general meeting in Helsinki, Finland, on May 5th, 2015. REUTERS/LEHTIKUVA/Roni Rekomaa