On Friday 22 May 2015, Rajeev Suri, chief executive of Nokia (NOK, Financial), the Finnish communication technology giant fueled the rising interest in its mapping services "Here" by saying the company was in no rush to sell "Here" indicating dissatisfaction with the current crop of offers and expectations of higher bids by interested technology and automobile companies especially with the forthcoming self-driving car technology. He emphasizes that Nokia will sell this sophisticated technology only if the deal is suitably rewarding for the company as well as its shareholders and even said that a final sale may not even materialize if the price is not satisfactory. With major automobile giants citing self-driving cars as the next revolution, the state-of-the-art navigation technology facilitated by advanced digital maps on "Here" make it immensely appropriate for realizing this innovation and will most probably give an edge to the car manufacturer employing this proven technology. Nokia hopes to capitalize on the superior capability and growing popularity of its mapping asset which it fair valued at $2.2 billion and has been open to potential investors since its strategic review in April 15, already having received bids above $3 billion.
The 'Here' story
Here is a Cloud-computing mapping and location services technology which stores location data and services on remote servers making it easily accessible with online connectivity and has developed from the original Navteq which was acquired by Nokia Corporation for $6.3 billion in 2008. Named Ovi maps and Nokia maps until it developed into its advanced current form, it has a major launch coming up in the next few months to showcase HD Live Map that can be employed in semi-autonomous vehicles which are called Advanced Driver Assistance Systems to facilitate benefits like extended cruise control and automated parking. In addition to the high definition mapping service which will offer detailed information from the local surroundings, "Here" is also developing a customised user application which suggests routes and alternatives as per user’s past driving habits and preferences.
Nokia, the erstwhile leader in mobile telephones has honed its navigation services to provide the perfect futuristic driving assistance, from mapping a route to a target, saving the path online for constant synchronisation and taking pre-emptive action of looking for available parking space and guiding the user to his final destination. With more and more car buyers looking at sophisticated in-car digital services, "Here" with expected revenue of nearly €600 million this year and its main rivals, the Dutch TomTom (TMOAF, Financial) which mostly services France and is estimated to generate €64 million this year and Google (GOOG, Financial) maps and navigation products are vying for the expected 25 million smart cars that will have on-board navigation systems by 2021. Nokia started an auction of this market leader in Apr 15 when it announced $17.2 billion acquisition of Alcatel Lucent (ALU, Financial), the prominent network equipment maker.
The bids
The contest for Here is currently poised as a three-way contest between the industrial consortium of German carmakers BMW (BAMXY, Financial), Volkswagen’s (VLKAY, Financial) Audi and Daimler (DDAIF, Financial) with private equity firm General Atlantic, a syndicate between Uber, the ride-sharing taxi service company ,China’s largest search company Baidu (BIDU, Financial) and Private equity firm Apax and a third front made up of Chinese map maker Navinfo and Tencent Holdings (TCEHY, Financial), a major media, mobile and Internet services firm in China in conjunction with the Swedish buyout firm EQT Partners AB. The automakers have apparently offered an undisclosed bid on 21 may 15 with each contributing an amount between 700 million to 1 billion euros while Uber with its focus on automated taxi robots has submitted a proposal valued between $2 billion to $4 billion.
With tech savvy car buyers eyeing sophisticated smart cars, the automakers consortium may get strengthened with more car makers joining it, the demand for the Nokia asset is here to stay.
