The mobile handset maker expects its purchase of the electronic mapping company to accelerate its expansion into location-based Internet services.
Nokia will pay $8.1 billion to acquire location and mapping company Navteq in a bold move that snatches the Chicago company from under the nose of Nokia's handset competitor Motorola. The agreement states that Nokia will pay $78 in cash for every share of Navteq, including the outstanding options.
Navteq is based in Chicago and sustains digital maps which the company licenses to web sites and global positioning systems. The company was founded in 1985 and has 168 offices in 30 countries and has a total staff of 3,000. In its recent second-quarter results, Navteq reported revenue of $202 million and net income of $41 million. Navteq also own Traffic.com, a provider of traffic information to consumers.
Olli-Pekka Kallasvuo, Nokia’s president and chief executive stated “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.”
Nokia has been making many acquisitions to build up its presence in the mobile Internet space, offering users music downloads and advertisers more options in conjunction with Nokia services. Kallasvuo added that with the acquisition of Navteq, Nokia “will be able to bring context and geographical information to a number of our Internet services with accelerated time to market.”
The two firms had been talking about a deal for a few weeks, according to media reports. Navteq's chairman, Christopher Galvin, said 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."
Galvin was formerly CEO of Motorola, but was eased out in a management transfer a few years ago.
Nokia said Navteq will continue to operate independently under president and CEO Judson Green, who will report to Kallasvuo. The reporting arrangement will ensure that Navteq's customers will continue to have dedicated units serving them with digital map information for automotive navigation systems, mobile navigation devices, and Web-based mapping features.