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Nokia announce the acquisition of Navteq
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MikeB
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PostPosted: Mon Oct 01, 2007 8:35 pm    Post subject: Nokia announce the acquisition of Navteq Reply with quote

Just as I was completing the competition to see who would be involved in the next company take over in the SatNav industry I was piped to the post by the announcement today that Nokia is to buy Navteq. This somewhat messes up an article I had in preparation about the TomTom take over of Tele Atlas.

The purchase price values Navteq at US $8.1 billion. The offering is a 34% premium on the Navteq share price from last month. Interestingly unlike the TomTom/Tele Atlas announcement, Navteq shares have fallen slightly today by 2%.

This announcement now means that we no longer have any independent global mapping companies. It also shows that both TomTom and Nokia have serious visions for the future in navigation and Location Based Services.

Last month there was a lot of talk and speculation at the Canalys Navigation forum where the leaders of the SatNav industry met. The keynote from the Canalys president Steve Brazier speculated on who could put in a bid for who with a graph of the Market Capitalisation of the relevant companies. Nokia were 4th on the list of potential buyers after Microsoft, Google and HP. Whereas in the GPS sector Navteq are second in MC to Garmin. In a poll of the attendees the consensus of opinion was that Garmin would buy Navteq. Nokia didnt come into the equation... We were all wrong.

My money was on Google acquiring Navteq. I was wrong as well.

I suppose in the end it makes a lot of sense for Nokia to buy into this market as they can have the authority to produce total solutions and then distribute them World-Wide. Once again we see a bold move being made which is still reliant on the Wireless Carriers to make or break the uptake of LBS in the mass market.

I was unable to contact either Navteq or Nokia today for comments, but I will be seeing some senior Navteq Execs at CTIA in a few weeks time. Where I will be able to quiz them about the deal and what it will mean to the users.
Official Navteq Press Release wrote:
Nokia to acquire NAVTEQ
The combined entity would create a leading global player in the fast growing location based services market
NAVTEQ to support existing customers as before


October 1, 2007 -- Nokia and NAVTEQ today announced a definitive agreement for Nokia to acquire NAVTEQ. Under the terms of the agreement, Nokia will pay $78 in cash for each share of NAVTEQ including outstanding options for an aggregate purchase price of approximately $8.1 billion (€5.7 billion), or approximately $7.7 billion (€5.4 billion) net of NAVTEQ existing cash balance. The acquisition has been approved by the board of directors of each company and is subject to customary closing conditions including regulatory approvals and NAVTEQ shareholders’ approval.

The navigation area is a fast growing business, and with location-based services expanding rapidly into mobile communications devices, the industry is poised for even further growth. NAVTEQ brings a number of key assets to Nokia: a great team with best-in-world maps and navigation industry expertise, a strong customer base and an industry-leading map data and technology platform with the broadest geographical coverage.

NAVTEQ will continue to provide the most advanced and flexible map data platform to navigation industry players. With NAVTEQ, Nokia will further strengthen its location based services offering and bring to market the most innovative, context aware Nokia Internet services with accelerated time to market.

NAVTEQ is a leading provider of comprehensive digital map information for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, and government and business solutions. NAVTEQ also owns Traffic.com, a web and interactive service that provides traffic information and content to consumers. The Chicago-based company was founded in 1985, generated 2006 revenues of $582 million and has approximately 3,000 employees located in 168 offices in 30 countries.

Nokia is the world’s largest mobile device manufacturer with more than 900 million people using a Nokia mobile device around the world. Driven by Internet and digital convergence, Nokia is expanding its offering to include areas such as entertainment, communities and location based services. Shipping with the GPS-enabled Nokia N95 multimedia computer, the Nokia Maps solution is one of the most advanced location based services in the marketplace today.

“Location based services are one of the cornerstones of Nokia’s Internet services strategy. The acquisition of NAVTEQ is another step toward Nokia becoming a leading player in this space,” said Olli-Pekka Kallasvuo, President and CEO, Nokia. “By joining forces with NAVTEQ, we will be able to bring context and geographical information to a number of our Internet services with accelerated time to market. We also look forward to maintaining and enhancing the services and support provided to NAVTEQ's existing and future customers".

"Nokia's unique vision for location based services aligns perfectly with NAVTEQ’s vision to enable everyone to find their way to people, places and opportunities on mobile communications devices, cars, desktop computers and in all the other places that are important to them," said NAVTEQ President and CEO Judson Green. "It's really exciting to imagine what we can achieve by combining our location experience with the resources of a company that has a customer base of more than 900 million people.”

In commenting on the transaction, Christopher Galvin, Chairman of the Board of NAVTEQ, said "Nokia’s offer of $78 per share reflects a very attractive valuation for NAVTEQ's stockholders, representing a 34% premium to our stock price of one month ago. In considering the offer, we approached other potential purchasers about their possible interest in NAVTEQ and our Board took those contacts and discussions into account in determining that Nokia's proposal was the best opportunity available to maximize value for our stockholders."

After completion of the transaction, NAVTEQ’s current map data business will continue operationally independent, but organizationally a Nokia Group company. Judson Green will report directly to Olli-Pekka Kallasvuo. This will ensure that NAVTEQ’s current and future customers continue to have a dedicated and strengthened unit serving them as before with digital map information for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, as well as government and business solutions.

The acquisition is expected to close in the first quarter of 2008. Nokia plans to finance the acquisition with a combination of cash and debt, and has secured a commitment on the debt. Nokia anticipates that the acquisition would not impact its share buy-backs under the current mandate, or its future cash distribution strategy in terms of dividends and share buybacks which is subject to the shareholders’ approval. The acquisition is expected to be dilutive to Nokia earnings in 2008 and 2009 on a reported basis. However on a cash basis Nokia expects it to be only slightly dilutive in 2008 and slightly accretive in 2009.

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PostPosted: Tue Oct 02, 2007 8:01 am    Post subject: TeleAtlas=TomTom & Nokia=Navteq Reply with quote

Very interesting reading, Mike but what will this mean for the average (in my case below average) user of GPS devices Question
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PostPosted: Tue Oct 02, 2007 9:07 am    Post subject: Reply with quote

As per the TeleAtlas/TomTom deal the question is how other manufacturers will feel about having to buy their map data off a competitor.

On the flip side neither Nokia nor TomTom could afford to acquire these companies solely for their own use and so they will have to ensure they still have other customers for their maps.
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PostPosted: Tue Oct 02, 2007 9:12 am    Post subject: Re: Nokia announce the acquisition of Navteq Reply with quote

MikeB wrote:
This announcement now means that we no longer have any independent global mapping companies.


Which is a bit of a worry...

People seem to be saying that Nokia paid too much for Navteq too. At least Microsoft didn't buy it!
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PostPosted: Tue Oct 02, 2007 9:26 am    Post subject: Reply with quote

I was really hoping that Google would be the one to buy them. When Google enters a market they really shake it up.
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PostPosted: Tue Oct 02, 2007 11:10 am    Post subject: Reply with quote

MikeB wrote:
I was really hoping that Google would be the one to buy them. When Google enters a market they really shake it up.


That would have been a result. Still, we can't look back. It is reassuring to think/hope that the new owners, TomTom & Nokia cannot afford not to supply to competitors, but I bet they (the competition) will have to pay a good market price for the mapping whereas to 'owners' will have the cost effective usage.
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PostPosted: Tue Oct 02, 2007 11:29 am    Post subject: Reply with quote

Perhaps Google's hands were tied by their usage of TeleAtlas data in Google Maps.

TomTom and Nokia now have no third party mapping companies to blame for mapping errors, so will having their own reputations on the line mean better maps for the end user?
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PostPosted: Tue Oct 02, 2007 1:01 pm    Post subject: Reply with quote

As both mapping companies will be run as separate business units you can rest assured that TA/NT will still carry the can for any issues in the maps.
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PostPosted: Wed Oct 03, 2007 1:21 am    Post subject: Reply with quote

Would seem like Nokia got the more profitable deal.

Navteq reported revenue of $202.3 million for the second quarter, up 49 percent from a year earlier, and net income of $40.9 million.
By contrast, Tele Atlas reported revenue of ,72 million (US$103 million) for the same period, an increase of 21 percent, and a net loss of ,1.2 million.

Navteq also gives Nokia a profitable services arm at a time when average selling prices for its phones have been falling.

Most of the profit in the navigation market has been taken by device vendors like TomTom and Garmin.
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PostPosted: Wed Oct 03, 2007 10:56 am    Post subject: Reply with quote

MikeB wrote:
As both mapping companies will be run as separate business units you can rest assured that TA/NT will still carry the can for any issues in the maps.


What about this new TomTom system where people can submit map updates. My impression was that the licensing of TA/NT maps prevented TT/Garmin et al from doing this for a long time.

Wouldn't this mean that TT could write their own license agreement allowing this and prevent other TA map customers from doing the same?
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PostPosted: Wed Oct 03, 2007 12:38 pm    Post subject: Reply with quote

Skippy wrote:
MikeB wrote:
As both mapping companies will be run as separate business units you can rest assured that TA/NT will still carry the can for any issues in the maps.


What about this new TomTom system where people can submit map updates. My impression was that the licensing of TA/NT maps prevented TT/Garmin et al from doing this for a long time.

Wouldn't this mean that TT could write their own license agreement allowing this and prevent other TA map customers from doing the same?


in which case those who use TA maps at present would probably move to NT maps?
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PostPosted: Thu Oct 04, 2007 12:08 am    Post subject: Reply with quote

I'm wonder if this is the "end game" for TomTom (or not).

For fun, I'll say that Microsoft will by TomTom(TeleAtlas). Or maybe some other big player.
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PostPosted: Thu Oct 04, 2007 8:09 am    Post subject: Reply with quote

Captain_Eric wrote:
I'm wonder if this is the "end game" for TomTom (or not).

For fun, I'll say that Microsoft will by TomTom(TeleAtlas). Or maybe some other big player.


They had their chance! See Mike's report above
Quote:
Nokia were 4th on the list of potential buyers after Microsoft, Google and HP


We are only the consumers, so sit back and watch with interest - or not Wink

Graham
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PostPosted: Thu Oct 04, 2007 9:35 am    Post subject: Reply with quote

Great - CoPilot use navteq maps and I use CoPilot 7 on my Windows Mobile device.
Having to rely on N*kia to provide my data fills me with dread!
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PostPosted: Thu Oct 04, 2007 9:54 am    Post subject: Reply with quote

CoPilot 7? Has that been released now?
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