A recent article on BloombergBusiness reported that Nokia (NYSE:NOK) is actively shopping its map business to a number of companies, noting that it:
....is trying to drum up interest from some of the biggest names in technology including Apple Inc. (NASDAQ:AAPL), Alibaba Group Holding Ltd. and Amazon.com Inc., people with knowledge of the matter said.
Those companies as well as Facebook Inc. (NASDAQ:FB), a group of German carmakers, and private-equity firms are among the companies looking at Nokia's maps operations, ...
I first wrote about Nokia and its HERE product in September of 2013. At the time, Nokia was selling its cell phone business to Microsoft (NASDAQ:MSFT), and it was also announced that Microsoft would also be licensing and using Nokia's mapping services.
I wrote that Nokia's HERE business included the following:
1. HERE Auto, an embedded in-car navigation experience that delivers timely directions and without a data connection, including turn by turn voice guided navigation, and 2D, 3D and satellite map views including street level imagery.
2. HERE Auto Cloud provides drivers with always-on access to several dynamic services such as real-time traffic updates, helping drivers avoid congested areas, road closures or blockages that occur en route. Drivers can also get recommendations on places to eat, parking spots, information on where to charge an electric vehicle or where to find the most inexpensive fuel.
3. HERE Auto Companion, a customizable mobile and web application, keeps drivers connected outside of the car allowing them to synchronize their favorite places and routes across their devices so that they won't need to re-enter their route when they get in the driver's seat. Drivers could use the app to remotely find their car with their device using LiveSight augmented reality technology and check the car's vital stats such as fuel levels and tire pressure.
4. HERE Traffic - An improved package that delivers real-time information such as weather, traffic congestion, road construction and other factors that affect a drive.
Now, according to Bloomberg, Nokia "is seeking more than 3 billion euros ($3.2 billion) from a sale of the unit." It also notes that Nokia paid $8.1 billion in 2008 for the mapping assets. Those assets "were worth about 2 billion euros last year, according to Nokia's financial reports."
Of interest to SiriusXM Holdings (NASDAQ:SIRI) investors are a few additional references in that Bloomberg article:
Sirius XM Holdings Inc. and Harman International Industries Inc. also were approached about their interest, said the people. First-round bids for the unit are due at the end of next week, one person said.
Sirius, the world's largest satellite-radio provider, is focusing on expanding its offerings to connect automobiles to the Internet. Alibaba, the largest Chinese e-commerce company, and Baidu, China's largest search engine, are also interested in broadening their portfolios to offer more products and services to users.
Private-equity firms Silver Lake Management, Hellman & Friedman, Apax Partners and General Atlantic may also bid, the people said.
A spokesman for Nokia declined to comment, as did representatives for Apple, Alibaba, Facebook, Sirius, Baidu, Harman, Silver Lake, General Atlantic and Hellman & Friedman. ...
The Sirius Fit
At the Deutsche Bank Leveraged Finance Conference, in early Fall of 2013, Sirius CFO David Frear was questioned about the company's plans, including the pending acquisition of the Connected Vehicle Unit from Agero. At that conference, Frear also discussed future acquisitions:
You know there are not a whole lot of players to acquire right in the space and one of things you can look at doing is, you can look at going more vertical, on the space that there are some data sources that you can go out and acquire. So we certainly are looking at the vertical stack, as well as the other service providers and just sort of keeping tabs on them, but I would say there is nothing imminent.
Does the purchase of the HERE product suite fit with the Connected Vehicle Services unit of Sirius? From a vertical integration perspective it would certainly seem to be an excellent fit. Many of the functions are included in the product description, including traffic, vehicle monitoring and location based services.
It seems like it could even be a perfect fit, except for two rather important factors. First, Bloomberg refers to HERE as Nokia's "money-losing maps business." Second, and possibly even more important, how would Sirius come up with the estimated $3.2 billion purchase price. That said, it would make sense for Sirius to explore the possible purchase, if only to get a more detailed look at the books of the HERE business unit.
Disclosure: The author is long SIRI.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: In addition to my long positions, I have January 2016 $4 covered calls written against a small portion of my long positions and January 2016 $4.50 covered calls written against a majority of my long positions in Sirius XM. I also continue to make frequent short term trades on large blocks of Sirius XM on a regular basis. I may close the current call positions, open new call positions or buy or sell large blocks of Sirius at any time.
