Nokia buys Chicago mapmaker
CHICAGO -- Nokia Corp. has agreed to buy Chicago-based digital mapmaker Navteq Corp. for $8.1 billion in a deal that shakes up the GPS device market and underscores the intent of the world's largest mobile phone maker to use more navigation in its handsets and other products.
The deal announced Monday, one of Nokia's biggest ever, brings the Finnish company's ample financial resources to a location-based services industry fast accelerating toward mainstream use as consumers embrace the growing variety of applications for global positioning systems.
Analysts said it also headed off a potential similar move by a company such as Google Inc. or Garmin Ltd. to snatch away Chicago's Navteq, one of the few remaining providers of mapping data with the pending acquisition of rival Tele Atlas NV by TomTom NV.
"This kind of cements Nokia's push into navigation," said Mark McKechnie, an American Technology Research analyst. "As the leader in the cell-phone business, they want to see more and more functionality get into the handset -- taking the turn-by-turn directions, for example, and moving them from high-priced car applications to applications that fit in your pocket."
The price tag was high, partly reflecting that shares in fast-growing Navteq have doubled since May. Under the agreement approved by the boards of both companies, Nokia will pay $78 in cash for each Navteq share, including outstanding options.
A trailblazer of the digital map business, Navteq produces the maps and software found in automobile navigation systems, portable navigation devices made by Garmin and other companies and Internet map sites like AOL's Mapquest, Google Maps and Yahoo Inc.'s Yahoo Maps. Founded in 1985 and only profitable since 2002, it has over 3,000 employees in 30 countries.
Concerns that Nokia might potentially keep some or all Navteq information to itself prompted a double-digit tumble in shares of Garmin Ltd., one of Navteq's biggest customers.
But Nokia's comments seemed to dismiss that prospect, and some analysts called it unlikely. McKechnie said antitrust regulators could attach restrictions to the deal to prevent that.
An industry executive speaking on the condition of anonymity said Google may decide it needs access to a digital map database, especially if the widely rumoured Google phone turned out to be a real product. Google is already taking comprehensive pictures of cities for its online maps system.
"If Google turns out to be a Nokia competitor in six months, it could be a worry for Google (not to have the same access to digital maps)," the executive said.
In such an event, Google could try to buy TomTom after the acquisition of Tele Atlas closed instead of making a counterbid for Navteq or Tele Atlas directly, the executive said.