Alibaba offers to buy digital mapping company AutoNavi

Mon Feb 10, 2014 11:11pm IST

An employee walks past a logo of Alibaba Group at its headquarters on the outskirts of Hangzhou, Zhejiang province, in this May 17, 2010 file photo. REUTERS/Stringer/Files

An employee walks past a logo of Alibaba Group at its headquarters on the outskirts of Hangzhou, Zhejiang province, in this May 17, 2010 file photo.

Credit: Reuters/Stringer/Files

Related Topics

Stocks

   

REUTERS - Alibaba Group Holding Ltd IPO-ALIB.N, China's largest e-commerce firm, offered to buy AutoNavi Holdings Ltd AMAP.O in a deal valuing the Chinese digital mapping and navigation firm at $1.58 billion.

Alibaba, which already owns 28 percent of AutoNavi, has been trying to expand its product line-up to better compete with Chinese rivals Tencent Holdings Ltd and Baidu Inc (BIDU.O).

Baidu started offering its map software for free last August, challenging AutoNavi's dominance in the Chinese navigation market.

AutoNavi followed suit by offering its own navigation software for free.

"The market for navigation and map applications and services has become increasingly challenging ... ," Alibaba said in a letter to AutoNavi, arguing that its proposal provided value that would be difficult for it to achieve on its own.

AutoNavi, which has not reported fourth-quarter results, posted year-on-year declines in revenue in each of the first three quarters of 2013. Revenue for the first three quarters totaled about $110 million.

More than half of AutoNavi's revenue comes from licensing map data for dashboard navigation systems used in cars. Customers include Audi (NSUG.DE), BMW (BMWG.DE) and General Motors Co (GM.N).

AutoNavi, which went public in 2010, also provides map software for Samsung Electronics Co Ltd's smartphones as well as services to China Mobile Ltd and Google Inc (GOOG.O).

AutoNavi said on Monday that Alibaba had offered to buy the 72 percent of the company that it did not own for $21 per American depository share, or $5.25 in cash per ordinary share.

The offer represents a premium of 27 percent to AutoNavi's ADR close of $16.54 on the Nasdaq on Friday.

AutoNavi shares were trading slightly below the offer at $20.57 in early trading on Monday.

The company's shares have risen about 47 percent in the past year. The stock was trading at 39 times earnings for the last four quarters, more than double that of other navigation device makers such as Garmin Ltd (GRMN.O) and TomTom NV (TOM2.AS).

The proposed buyout follows a series of deals in the fast-growing Chinese technology sector.

Alibaba, which is expected to go public in the United States this year, bought a stake in Sina Corp's (SINA.O) microblogging service Weibo, the Chinese equivalent of Twitter, last April.

Alibaba, which is 24 percent owned by Yahoo Inc (YHOO.O), announced its 28 percent stake in AutoNavi in May.

AutoNavi said it would form a committee including financial and legal advisers to consider the offer, which Alibaba plans to fund with cash on hand.

Alibaba runs Taobao Marketplace, China's largest consumer-focused e-commerce website; business-to-business commerce platform Alibaba.com; and Alipay, a PayPal-like online payment platform.

(Reporting By Sampad Patnaik and Chandni Doulatramani in Bangalore; Editing by Saumyadeb Chakrabarty)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Rising Star

Reuters Showcase

Cybercrime

Cybercrime

Hacker sentenced to 21 months in U.S. prison for $15 mln scheme.  Full Article 

Printed Instruments

Printed Instruments

3D printed instruments make sweet music in Sweden.  Video 

Tweet Debut

Tweet Debut

Britain's Queen Elizabeth sends her first tweet.  Full Article 

Artificial Intelligence

Artificial Intelligence

Google bolsters artificial intelligence efforts, partners with Oxford.  Full Article 

Fighting For Workers

Fighting For Workers

Ralph Nader urges Apple to reduce buybacks, improve wages - WSJ.  Full Article 

Future Uncertainty

Future Uncertainty

Ericsson flags North America slowdown.  Full Article 

Microsoft Earnings

Microsoft Earnings

Microsoft sales beat Street hopes, cloud profits up.  Full Article 

Looking To Sell

Looking To Sell

HP seeking buyers for corporate-networking business in China - WSJ.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage