Alibaba seeks full acquisition of AutoNavi
Chinese e-commerce giant Alibaba Group has offered to buy the 72% of NASDAQ-listed AutoNavi Holdings that it doesn’t already own for $1.13 billion. The take-private deal would value the digital mapping and navigation firm, which has previously received substantial VC investment, at $1.58 billion.
According to a regulatory filing, Alibaba is willing to pay $21 in cash for each outstanding American Depository Share. This represents a 27% premium to AutoNavi's closing price on Friday.
"The market for navigation and map applications and services has become increasingly challenging, as several larger, well-capitalized Internet players in China have become major competitors to the company. We believe that Alibaba is uniquely positioned to offer superior value to AutoNavi's shareholders based on our complementary, rather than competitive, business strategies and the potential synergies we can achieve from a full combination," the company said.
AutoNavi posted a net profit of $3.7 million for the first three quarters of 2013, down from $29.1 million for the comparable period in 2012. Revenues were reasonably stable but the company saw a substantial increase in research and development and sales and marketing expenses.
Users of AutoNavi's free mobile map application had grown to 171 million as of September 2013, compared to 85 million in September 2012. The premium navigation application was downloaded and pre-loaded on to approximately 83 million smart phones in the third quarter of 2013.
Alibaba agreed to pay $294 million for a 28% stake in AutoNavi in May 2013 - one of a string of acquisitions by Chinese internet companies as they seek to diversify business lines.
In addition to investing in AutoNavi, several Alibaba subsidiaries - including Taobao Marketplace and Tmall - formed a strategic alliance with the company to develop location-based e-commerce opportunities.
The alliance was expected to allow AutoNavi to establish a large "points of interest" (POI) platform based on the consumer preferences of its users. It meant the company could monetize its wealth of data by providing a one-stop service application that integrates merchant information with POIs search, data mining, payment and other e-commerce activities.
AutoNavi claims to be the leading provider of digital map content and location-based solutions in China. Its services are underpinned by a nationwide digital map database that covers approximately 3.6 million kilometers of roadway and over 20 million POIs.
According to AVCJ Research, AutoNavi received $40 million in VC funding in 2006 from a group of investors. The consortium included Walden International, Sequoia Capital, Legend Capital, ChinaValue Capital Advisors, Harbinger Venture Management, Indus Capital Advisors, Inventec Appliances, KPCB and MTI Capital. The company went public in 2010, raising $107 million.
As of April 2013, none of these investors was among AutoNavi's principal shareholders.
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