August 2, 2015 / 7:59 PM / in 2 years

German auto makers agree deal to buy Nokia HERE: sources

FRANKFURT (Reuters) - A consortium of German premium carmakers has agreed a deal to buy Nokia’s NOK1V.HE mapping business HERE, two people familiar with the matter said on Sunday, in a push to extend the reach of automakers into digital services for connected cars.

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

The consortium of Daimler (DAIGn.DE) BMW (BMWG.DE) and Volkswagen’s (VOWG_p.DE) premium division Audi (NSUG.DE), has agreed to pay close to 2.9 billion euros ($3.2 billion), one of the people said.

The sources said the deal was likely to be announced on Monday.

Daimler declined to comment while BMW, Audi and Nokia did not immediately respond to requests for comment.

Intelligent mapping systems are the basis on which self-driving cars linked to wireless networks can perform intelligent functions such as recalculating a route if data about a traffic jam or an accident is transmitted to the car.

In the future, such mapping systems will have a role to play in collision detection and other features of self-driving cars.

Autonomous and connected car services could become a $50 billion market, analysts at Exane BNP Paribas have estimated.

Nokia is shedding the maps business to help it focus on integrating its 15.6 billion-euro purchase of Alcatel Lucent ALUA.PA, a deal that will create the world’s second largest network equipment maker.

The Finnish company announced a strategic review of its navigation business in April, setting up an auction process that pitted Germany’s premium automakers against Internet rivals from the United States and China, who have now pulled back.

Competitors included one bidding group involving U.S.-based online taxi and ride-sharing service Uber with Chinese Internet company Baidu (BIDU.O).

Another group brought together services firm Tencent Holdings (0700.HK) and map maker Navinfo Co (002405.SZ), sources said previously.

Daimler, BMW and Audi want to become service providers as a way to own customer relationships which may otherwise migrate to new transport businesses created by high-tech rivals such as Google (GOOGL.O) or Apple (AAPL.O).

Additional reporting by Andreas Cremer in Berlin, Eric Auchard in Frankfurt and Jussi Rosendahl in Helsinki; Editing by Georgina Prodhan

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