Move intended to make inroads in Internet of Cars industry
Chinese Internet giant Baidu Inc reportedly plans to buy Nokia Corp's maps business, a move analysts said on Tuesday is intended to further explore opportunities in the heated Internet of Cars sector.
According to unidentified sources quoted by Bloomberg on Tuesday, Baidu is teaming up with US-based car services firm Uber and UK-based private equity firm Apax Partners to battle for Nokia's maps unit HERE.
The value of Baidu's purchase was not disclosed by Bloomberg, but a Reuters report in late April said that Inderes Equity Research valued HERE at 4.4 billion euros ($4.9 billion) to 6.9 billion euros.
"The report may be true. Buying HERE can be regarded as a part of Baidu's efforts to tap into the Internet of Cars industry," Fu Liang, a Beijing-based independent IT expert, told the Global Times Tuesday.
Analysts believe the Internet of Cars can be a promising market as it does not just refer to a vehicle connected to the Internet, but is expected to be a next-generation tech product that can communicate with other such products and lead to better traffic management as well as self-driving.
In April 2014, Baidu said it launched an in-car networking system CarNet, featuring location-based services and voice-driven navigation with the advantage of Baidu's mapping technology.
The company is also working on self-driving technology for cars, Baidu's CEO Robin Li Yanhong said during China's legislative and political consultative sessions in March.
"The acquisition, if achieved, can give Baidu access to HERE's abundant technologies and patent portfolios in navigation, mapping and location intelligence," said Fu, noting that HERE is a leader in global maps services.
HERE reportedly seized over 80 percent of the global market share of all built-in car navigation systems, providing auto navigation systems for automakers such as Toyota Motor Corp and Honda Motor Co as well as data to Microsoft and Amazon.
In addition, Zhang Yi, CEO of Guangzhou-based market research firm iiMedia Research, told the Global Times Tuesday that Baidu can also further its overseas expansion if it can acquire HERE.
As of December, Chicago-based HERE, the rebranded Navteq which Nokia bought for over $8 billion in 2007, covered nearly 200 countries and regions, according to information on HERE's website.
In the first quarter of the year, HERE performed fairly good with a 29 percent increase year-on-year in sales of new vehicle licenses for embedded auto navigation systems, according to Nokia's financial report.
Apart from Baidu, many other tech giants in China and abroad as well as automakers are said to have also showed their interest in Nokia's maps unit, since the Finnish company said that it had started a strategic review of HERE as it focuses on mobile network services to better compete with China's leading telecommunications equipment maker Huawei Technologies Co.
A group, comprising Baidu's major rival Tencent Holding, Swedish buyout firm EQT Partners AB, and China's digital map services provider NavInfo Co, is also trying to pursue HERE, which may be priced at up to $4 billion, according to Bloomberg.
Microsoft and German premium car makers such as Audi AG and Daimler AG are also bidding for the unit, said the report.
Audi, Daimler, EQT, Nokia, Tencent, and Microsoft could not be reached for comment by press time.
Fu said that Chinese tech companies, which lack experience in taking over large overseas companies, may lose the battle to foreign counterparts.
However, Zhang had a different opinion, saying that companies which can offer a satisfactory price will win the HERE deal.
The big hurdle for Chinese companies in buying HERE is from foreign authorities, said Zhang.
"Acquisitions in high-tech sectors such as mapping and telecommunications can easily bring on strict scrutiny from authorities due to security concerns," Zhang said.
In order to avoid such types of regulatory scrutiny, Baidu is partnering with Uber, a U.S. car services company with operations all over the world, in buying HERE, the sources were quoted by Bloomberg as saying.
A PR representative of Baidu said the company had "no comment" on the reported deal when contacted by the Global Times on Tuesday.
Uber failed to reply to the Global Times' e-mail inquiry by press time.
Baidu's UK partner Apax Partners could not be reached for comment either.
