Tue, 04 Aug, 2015 12:21:38 AM FTimes Report, Aug 4 Nokia's Here maps application software on a Nokia Lumia smartphone in Helsinki on 3rd August 2015. Photo Lehtikuva. Nokia on Monday announced an agreement to sell its HERE digital navigation, mapping and location services business to a consortium of leading automotive companies, comprising AUDI AG, BMW Group and Daimler AG.
The HERE, valued euro 2.8 billion with a normalized level of working capital, is expected to close in the first quarter of 2016, subject to customary closing conditions and regulatory approvals, said a Nokia press release.
“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,” said President and Chief Executive Officer of Nokia Rajeev Suri.
Going forward, Nokia will focus on our planned combination with Alcatel-Lucent. Once that is complete, it 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, the CEO added.
“I believe today's announcement is a very good outcome for HERE, its customers and employees. The new ownership structure of HERE will allow us to accelerate our strategy, further scale our business and fulfil our intent to become the leading location cloud company across industries,” said HERE President Sean Fernback.
HERE is developing a location cloud that harnesses the power of data generated by vehicles, devices and infrastructure to deliver real-time, predictive and personalized location services.
In the automotive industry, where it serves most of the world's leading automakers, its focus is on developing precise and accurate mapping as well as services that will enable an entirely new class of driver experiences, including highly automated driving.
The company also serves the world's leading enterprises and Internet players, including Microsoft, Samsung and SAP, and offers highly rated apps to consumers using Android, iOS and Windows Phone.
On closing, Nokia estimates that it will receive net proceeds of slightly above euro 2.5 billion, as the purchaser would be compensated for certain defined liabilities of HERE currently expected to be slightly below euro 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 euro one billion as a result of the transaction.
In April 2015, Nokia announced a review of strategic options for HERE in light of its proposed combination with Alcatel-Lucent.
The announcement of this sale to the Consortium concludes that strategic review process.
HERE has been a separate operating and reportable segment for financial reporting purposes for Nokia with a non-IFRS operating profit of euro 46 million on net sales of euro 552 million for the first half of 2015, and a non-IFRS operating profit of euro 31 million on net sales of euro 971 million for the full year 2014.
In reported terms, HERE generated an operating profit of euro 28 million for the first half of 2015, and an operating loss of euro 1,241 million for the full year 2014, with the latter including a euro1,209 million charge for the impairment of goodwill, according to the release.
At the end of June 2015, HERE had 6,454 employees. 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.
Upon closing of the HERE transaction, Nokia will consist of two businesses: Nokia Networks and Nokia Technologies.
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