Nokia sells HERE mapping business to Audi, BMW, Daimler AG for $3 billion
Nokia today announced that it has signed an agreement to sell its HERE mapping business to a consortium of European automotive companies, comprising Audi, BMW and Daimler AG, for €2.8 billion ($3.07 billion). The new development comes a couple of months after the Finnish company started reviewing some strategic options to sell the mapping business in April.
The transaction is expected to close in the first quarter of 2016 and upon closing, Nokia would receive net proceeds of over €2.5 billion. Further, the sale would result a related release of cumulative foreign exchange translation differences of about €1 billion.
On announcing the sale of HERE mapping business, Rajeev Suri, President and Chief Executive Officer of Nokia, said in a statement:
“With this step we complete the latest stage of Nokia’s transformation. We integrated the former Nokia Siemens Networks, divested our Devices & Services business, and have now reached agreement on a transaction for HERE that we believe is the best path forward for our shareholders, as well as the customers and employees of HERE.”
After agreeing to sell HERE mapping business, Nokia is set to focus on its Nokia Networks and Nokia Technologies. The company is also set to use add new resources through its $16.6 billion deal of acquiring Alcatel-Lucent.
Commenting on the announcement, HERE President Sean Fernback said:
“I believe today’s announcement is a very good outcome for HERE, its customers and employees. The new ownership structure of HERE will allow us to accelerate our strategy, further scale our business and fulfill our intent to become the leading location cloud company across industries.”
Nokia’s HERE maps is one of the most renowned mapping solutions in the market and is among the strong competitors against Google Maps and Apple Maps. The mapping business unit has been operating as a separate segment for Nokia, similar to Nokia Devices and Services unit that the company sold to Microsoft last year.
HERE posted a non-IFRS operating profit of €46 million on net sales of €552 million for the first half of 2015, whereas its full year 2014 earnings showed an operating profit of €31 million on net sales of €971 million.
Nokia is in plans to report HERE mapping business as a “discontinued operation” from the third quarter of 2015. However, the business unit will continue to operate under the company until the closing of the transaction.
HERE has a workforce of 6,454 employees which all likely to be transferred to the owner following the completion of the transaction. But the company has not yet revealed any official details on their transition.
Rajeev assures in the statement that Nokia will continue to operate as a “network technology and services business” through its Nokia Networks, which formed after acquiring the entire stake of Siemens, as well as the “licensing and innovation engine” through Nokia Technologies.