Alibaba Group Holding Ltd is looking to beef up its resume in the digital mapping sector, and is willing to pay AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP) shareholders $21 a share to acquire the company. Alibaba already holds 28% of AutoNavi. The $21 unsolicited offer price is a 27% premium to AutoNavi’s $16.54 closing price last Friday.
AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP) shares are trading up $4.01 to $20.56 as of 1:40 pm EST.
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According to recent filings, just over half of AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP)’s revenues are derived from licensing map data for automobile navigation systems. AutoNavi’s client list includes major automakers such as Audi, BMW and General Motors Co.
In addition, AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP) provides map software for Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930)’s smartphones and a variety of services to China Mobile Ltd. (ADR) (NYSE:CHL) (HKG:0941) and Google Inc (NASDAQ:GOOG).
Details of the offer
Alibaba Group Holding Ltd’s all cash offer of $21 per ADR shares sets a value of $1.58 billion on the less than four year old public digital mapping and navigation concern. Although the price of AutoNavi Holdings Ltd (ADR) (NASDAQ:AMAP) shares has increased by almost 50% over the last 12 months, the company, which does not report fourth-quarter results until next week, posted year-on-year declines in revenue in each of the first three quarters of 2013. Revenue for AutoNavi for the first nine months of the year came out to around $110 million.
Alibaba looking to move into mapping sector
Alibaba owns and operates Taobao Marketplace, China’s largest consumer e-commerce website; business e-commerce platform Alibaba.com Limited (HKG:1688) (OTCMKTS:ALBCF), as well as Alipay, an online payment platform much like PayPal.
While Alibaba is the dominant player in most Internet-related sectors in Asia, the digital mapping sector is an exception to date. Analysts say this is just another move Alibaba to try and move into the digital mapping sector controlled by Chinese rivals Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY) and Baidu Inc (ADR) (NASDAQ:BIDU). Given today’s news, one would have to assume there is a good chance of other related acquisitions by Alibaba in the digital mapping sector.