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German carmakers buy Nokia maps to push digital rivals.
FRANKFURT German carmakers BMW, Audi and Mercedes, will pay about 2 to 5 billion 2 8 billion business buy Nokia maps, beating its high-tech rivals for location services considered essential to the future of self-driving cars.
Germany three premium automakers will own equal shares in the company, called here, gang to keep them away from Internet rivals Uber assets such as Silicon Valley and China Baidu BIDU O and Tencent.
The agreement has an enterprise value of 2 € 8 billion, including liabilities of nearly 300 million, for which Nokia will offset the automakers, the Finnish company said Monday The transaction is expected to close beginning in 2016.
The purchase enables manufacturers to offer new premium features, such as autonomous driving in luxury cars, shake the hierarchy between carmakers and their parts suppliers and software rivals like Uber, Google or Apple AAPL GOOGL O O.
With the joint acquisition of ICI, we want to guarantee the independence of the central service for all car manufacturers, suppliers and customers in other sectors, said Dieter Zetsche CEO of Daimler, who invented the automobile in 1886.
But we do not know how other HERE customers, including competitors automakers can meet the German car manufacturers with the card technology, many in the auto industry, internet and logistics see as the key to their own strategies.
There is a risk that other automakers will be pushed further into the arms of Google, said Richard Windsor, an independent financial analyst who follows major tech players.
Intelligent mapping systems as ICI s are the foundation on which the self-driving cars related to wireless networks can perform functions such as recalculation of a route to the electrical charging station closest or around a traffic jam or accident.
They are also used throughout the navigation smartphone consumers to local transport services.
At a later stage, automakers will invite private equity firm General Atlantic to join the consortium as a potential mediator investor, two sources familiar with the matter.
HERE is the leading provider of digital maps for most major car manufacturers, which account for half of its expected revenue of about 1 billion worldwide in 2015.
In addition, it competes with the Dutch mapping company TomTom smaller, which began to reorganize its business to focus on car manufacturers rather than consumers.
TomTom has recently teamed up with Bosch one of the largest automotive suppliers in the world, to create an alternative platform to ICI for automakers.
ICI was created by January 8 billion acquisition of Navteq in 2008 by Nokia, which was designed to create consumer card services for mobile phone users, but later put to concentrate on car manufacturers Nokia would get rid now its card business as it integrates the purchase of Alcatel-Lucent manufacturer telecommunications network equipment.
The Finnish company, which then reduced the value of ICI at about 2 billion euros, said it expected to book a gain on the sale to automakers, including cumulative translation differences of exchange, approximately 1 billion euros.
According to analysts, the 2 5 billion euros in net proceeds for Nokia was down to market expectations, which were between 2-4 billion during the sales process at auction.
Nokia's shares plunged 0 6 percent to close at 6 39 euros, underperforming a flat European technology index TomTom shares, which have gained 23 percent over the past three months on speculation it could also become a target acquisition, ended 2 percent higher after news of the deal.
In bidding for ICI, German car manufacturers seem to use their status as key customers to push the other bidders, said analyst Mikael Rautanen Inderes Equity Research This is why the price was lower than initially expected, he said.
Nokia was informed about the case by the investment bank Evercore and law firm Shearman additional reporting by Arno Schuetze in Frankfurt, Jussi Rosendahl in Helsinki and Leila Abboud in Paris; Editing by Jane Merriman and Susan Fenton.
German carmakers buy Nokia maps to push digital rivals Reuters, German automakers nokia maps.