Daimler AG (owners of Mercedes-Benz), BMW AG, and Audi AG are buying Here, Nokia Oyj’s digital-map division for 2.8 billion euros (roughly $3.07 billion) to gain technology for connected cars that will eventually be the basis for self-driving cars. And since Audi is a VW subsidiary, the buyers essentially represent the entire German car industry – or at least all the ones that matter. It was previously reported that ride-sharing service Uber was interested in purchasing the service, but the consortium clearly brought the most attractive offer to Nokia’s table.
Why the pretty penny for something that few travelers have even heard of?
Well, Here might not exactly be the navigation service of choice for most smartphone users, but it still remains the in-car entertainment navigation service for most big manufacturers. It generated more than half its €970 million in 2014 sales from the auto industry, with the rest coming from location-based services. Just last year, Nokia claimed that four out of five new vehicles sold with built-in navigation were being powered by its maps technology. Its three new owners all utilize the service, as does many other manufacturers, including Ford, Toyota, and aftermarket GPS companies like Garmin.
Nokia is shedding the maps business to help it focus on integrating its 15.6 billion-euro purchase of Alcatel Lucent, a deal that will create the world’s second largest network equipment maker. As part of the deal, it will receive proceeds of around €2.5 billion, with the buyers taking on €300 million in Nokia Here debt. The Finnish manufacturer said it would book a gain of €1 billion from this deal.
Nokia had built the business out of Navteq, a mapping service that it bought in 2008 for $8.1 billion.
While there has previously been limited cooperation on auto parts, a joint acquisition on this scale involving three of not just Germany’s- but the world’s largest carmakers is unprecedented in history. The deal underscores the German competitors’ push for self-driving systems ahead of technology giants such as Google and Apple.
Here’s new owners said that the service will be independent and that the company will continue to make its maps available to all customers across industries.
