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Nokia sells HERE to Audi, BMW and Daimler for $3 billion

nokia here (2)

Nokia has agreed to sell its digital mapping service Nokia HERE for € 2.8 billion (over $3 billion) to the automotive industry consortium which includes automakers Audi AG, BMW Group and Daimler AG. The sale is subject to customary closing conditions and Nokia expects net proceeds of approximately € 2.5 billion ($ 2.7 billion) from the closing of the sale, which would be sometime in the first quarter 2016.

HERE will continue as a Nokia business till sale is complete

Nokia states that the consortium will be compensated for some of HERE’s € 300 million ($329 million) defined liabilities as a part of the transaction. From the same, Nokia expects to gain cumulative foreign exchange differences of around € 1 billion (over $1.1 billion). HERE had over 6,500 employees and will continue to operate as a Nokia business until the transaction is closed. However, Nokia will report the HERE business as a ‘discontinued operation’ from the third quarter of 2015.

HERE Financials

Operating as a separate business, HERE had an operating profit of € 46 million ($50.47 million) on net sales of € 552 million ($605.6 million) in the first half of 2015. Its non-IFRS operating profit was € 31 million ($34 million) on net sales of € 971 million (slightly above $1 billion) for 2014.

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Other automakers to join the consortium?

We’d reported in late July that German automakers Audi, Daimler AG and BMW AG had agreed to buy Nokia’s digital mapping service Nokia HERE for about $2.7 billion. Although the deal was not ascertained at that time, it was said that the 3 automakers would invite other automakers like Fiat Chrysler Automobiles NV, Renault SA, PSA Peugot Citroën, Ford Motor Co, Toyota Motor Corp and General Motors to invest in the mapping service.

In its press release, Nokia said that the sale of HERE concludes the strategic review process it had undertaken in April 2015, when it proposed to buy Alcatel-Lucent. After the sale of HERE, Nokia will consist of two business, namely Nokia Networks and Nokia Technologies. Nokia Networks will provide broadband infrastructure software and services, while Nokia Technologies will provide technology development and licensing.

Re-entry into mobile phones: In late June, Nokia CEO Rajeev Suri said that the company was planning on returning to the mobile phones business in 2016, after its contract clause with Microsoft preventing it from using its brand name on handsets expired. Suri said that Nokia would simply design the phones and subsequently make its brand name available to be licensed.

Alcatel-Lucent acquisition: In April, Nokia bought French telecommunications equipment company Alcatel-Lucent for $16.58 billion in an all share deal. The deal is expected to close in the first half of 2016. Alcatel-Lucent shareholders would own 33.5% of the fully diluted share capital of the combined company, while Nokia shareholders would own 66.5%, assuming full acceptance of the public exchange offer.

Nokia Financials: Nokia’s operating profits declined by 13% year-on-year (YoY) to €265 million in Q1 2015 from €305 million in the same quarter last year. The company had reported an operating profit of €524 million in the previous quarter. The company reported net sales of €3.2 billion in Q1 2015, as compared to €2.7 billion in the same quarter last year.

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Nokia Networks was the worst performing among the three major businesses Nokia has left post the sale of its devices and services business to Microsoft, in April last year. Nokia Networks’ operating profit was down 61% YoY to €85 million from €216 million in the same quarter last year.

Written By

I'm a MediaNama alumna from 2015-16 (remember TinyOwl?) now back to cover e-services like food and grocery delivery, app based transport and policies, platforms and media in India.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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