Monday, October 1, 2007

Nokia to Acquire Navteq for $8.1 billion

Nokia Corp.., the world leader in mobile communication products, has agreed to buy 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.

This deal is 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.

There is a potential similar move by a company such as Google Inc. or Garmin Ltd. to snatch away Chicago-based Navteq, one of the few remaining providers of mapping data with the pending acquisition of rival Tele Atlas NV by TomTom NV.

According to McKechnie, an American Technology Research analyst, Nokia has put itself as a leader in the cell-phone business. However, Nokia seems not satisfy with it, Nokia want to see more and more functionality to get into the handset.

After a month Nokia unveiled new services and cell phones that customers can use to download music and play games in a clear challenge to Apple Inc., highlighting a push to add photo, music and video capabilities and easy Internet access to its handsets. Its new Web services are to be on a site known as "Ovi" — Finnish for "door" — that will include an online music store.

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.

Navteq, which is a trailblazer of the digital map business, 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.

According Nokia, Navteq would continue to support its existing customers as before — with the Navteq map data business continuing to operate independently — however, Navteq would be organized as a Nokia group company.

According to Olli-Pekka Kallasvuo, Nokia President and Chief Executive, the 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. Moreover, by acquiring Navteq, Nokia will be able to bring context and geographical information to a number of our Internet services with accelerated time to market.

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