Its done and sealed. Confirming our previous report regarding possible sale of Nokia’s HERE division, the company has today confirmed the sale of its mapping asset to a consortium of German Carmakers for a previously speculated sum of $3.07 Billion.
The consortium comprises of some of the biggest names in automotive industry, including the likes of AUDI AG, BMW Group and Daimler AG
The transaction values HERE at an enterprise value of EUR 2.8 billion with a normalized level of working capital and is expected to close in the first quarter of 2016, subject to customary closing conditions and regulatory approvals.
Rajeev Suri, President and Chief Executive Officer of Nokia, said in a prepared statement
With this step we complete the latest stage of Nokia’s transformation. We integrated the former Nokia Siemens Networks, divested our Devices & Services business, and have now reached agreement on a transaction for HERE that we believe is the best path forward for our shareholders, as well as the customers and employees of HERE.
He further laid down his company’s plans of re-inventing the company, into a “renewed” Nokia,
Going forward, we will focus on our planned combination with Alcatel-Lucent. Once that is complete, Nokia will be a renewed company, with a world-leading network technology and services business, as well as the licensing and innovation engine of Nokia Technologies.
Nokia further announced about a new cloud-powered mapping service under HERE, which is currently under development. The new service is a location cloud that harnesses the power of data generated by vehicles, devices and infrastructure to deliver real-time, predictive and personalized location services.
According to multiple reports, Uber too had bid for HERE, with the amount going to the north of $3 billion. However, it was rejected by Nokia, which decided to go with more established, traditional players like Audi, BMW and Daimler.
Upon closing, Nokia estimates that it will receive net proceeds of slightly above EUR 2.5 billion, as the purchaser would be compensated for certain defined liabilities of HERE currently expected to be slightly below EUR 300 million as part of the transaction.
Nokia expects to book a gain on the sale and a related release of cumulative foreign exchange translation differences totalling approximately EUR 1 billion as a result of the transaction.
After adjusted calculations, HERE generated an operating profit of EUR 28 million for the first half of 2015, and an operating loss of EUR 1 241 million for the full year 2014, with the latter including a EUR 1 209 million charge for the impairment of goodwill. At the end of June 2015, HERE had 6 454 employees.
HERE’s sale, along with that of its smartphone division to Microsoft last year, has made Nokia a more focused, streamlined company, reporting in green after getting rid of its capital-intensive assets. While it announced a buy-out of Alcatel-Lucent post its smartphone sale-off, the company might look to go deeper into networking post HERE sale.
These individual division sales have led Nokia to come out of the slump it had gotten into, ever since Android took the smartphone market by storm, including Nokia’s more established emerging markets like India, Brazil.
Nokia plans to report HERE as a discontinued operation from the third quarter of 2015 onwards. HERE will continue to operate as a business of Nokia until the closing of the transaction.