Nokia to buy GPS map company Navteq for $8.1 billion
In a bid to accelerate its plans for location-based Internet services, Nokia has announced an $8.1 billion deal to purchase Navteq, a digital map information firm that provides data to automobile GPS systems, Internet-based mapping sites and mobile navigation devices.
The acquisition of Navteq is based on the premise that location-based services could become the next most important mobile application.
“Location-based services are one of the cornerstones of Nokia’s Internet services strategy,” said Olli-Pekka Kallasvuo, Nokia’s president and CEO, in a statement. “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.”
Navteq’s chairman, Christopher Galvin, on the other hand, told Information Week that the firm’s directors had discussed acquisition with several firms and had determined “Nokia’s proposal was the best opportunity available to maximize value for our stockholders.”
However, many analysts believed that the purchase price is expensive. Initial reaction of the investors also drove Nokia shares down by 2% in Helsinki trading following the announcement.
But Nokia Chief Financial Officer Richard Simonson has defended the purchase and told Business Week that investors didn’t initially understand the value that Navteq brings, but that it’s starting to become clear. He said, “Navteq is a $600 million company that has a great growth profile, and we need to pay for that.”
Nokia said Navteq map data business will continue to operate independently, but it will be organized as a Nokia group company. This setup will ensure that Navteq’s customers will continue to enjoy the same quality of services as before.
Related Posts:
