In a massive transaction designed to ramp up the company’s mobile navigation and services business, the world’s largest mobile phone maker Nokia has announced it has entered a definitive agreement to acquire mapping company Navteq for a $8.1 billion. Navteq, based in Chicago, develops digital mapping technologies widely licenses to GPS device manufacturers and online mapping services.
"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 Nokia president and CEO Olli-Pekka Kallasvuo, in a statement.
Nokia says Navteq will continue to provide map data and navigation information to existing customers and players in the navigation services business, and the mapping unit will continue operate independently, although it will be organized as a Nokia Group company. Nokia will also use Navteq technology to bolster its own location-based services and market new Internet-based mapping services. The acquisition is subject to regulatory approvals, but, barring unforeseen difficulties, should close in the first half of 2008.
Nokia is paying $78 per share of Navteq, which represents a 34 percent premium to Navteq shareholders. Nokia has acknowledged the transaction will dilute its earnings in 2008 and 2009—which may not go over very well with its own shareholders—but definitely serves as a sign of the Finland company’s long-term commitment to the mobile navigation and mapping space.
Navteq was founded in 1985; it has about 3,000 employees in 30 countries.
