TomTom Craves Rich Price That Nokia’s Maps Unit Found: Real M&A

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Nokia’s HERE Maps to Sell for $3.1B to German Carmakers

Nokia Oyj’s sale of its maps business is putting TomTom NV in play. But the Dutch competitor might not yet be worthy of an equally rich takeover bid.

A group of German carmakers is valuing Nokia’s HERE division at a price that implies about 2.9 billion euros ($3.2 billion) for TomTom, or about 25 times earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg.

That works out to about 13 euros a share, or 30 percent higher than TomTom’s current price -- a premium TomTom’s minority shareholders would probably welcome. Its stock hasn’t traded that high in six years and few analysts forecast it will return to that level on its own during the next year.

TomTom is exploring options that could lead to a sale, and it’s attracting companies and investors who were looking at Nokia’s HERE, people familiar with the matter said. Richard Piekaar, a spokesman for TomTom, said the company isn’t “talking to anybody about a sale.”

Nokia agreed Monday to sell HERE to BMW AG, Audi AG and Daimler AG for 2.8 billion euros. Uber Technologies Inc. considered teaming up with Baidu Inc. and Apax Partners to bid for HERE, people said earlier this year.

While TomTom is among the few digital-map assets that make viable targets for car manufacturers and technology giants such as Apple Inc. and Uber, the company trails HERE in market share in the automotive industry.

Timing Issue

TomTom Chief Executive Officer Harold Goddijn has said that 2016 is the year automotive orders will pick up and contribute to growth. Goddijn and other executives together own nearly half the company.

It may be premature to think about selling, said Thomas Picherit, an analyst for AlphaValue in Paris.

“The positive turnaround of the automotive segment at TomTom will only start to pay off starting in the first quarter of 2016, so management would be selling early” to do so now, Picherit said. “This would be out of character given that they have always taken a long-term approach to the development of TomTom.”

By acquiring HERE, the German consortium is gaining technology for connected cars, bringing them a step closer to self-driving vehicles. Those carmakers held preliminary talks with TomTom as an alternative deal, people with knowledge of the matter said.

With Apple also in the race for driverless cars, that leaves a potential buyer for TomTom that has plenty of cash for a purchase.

“I would have expected Apple to be the first one securing independent access to the maps business, and they’ve got tons of money to spend, so it wouldn’t be a big deal for them,” Marcel Achterberg, an Amsterdam-based analyst for Petercam, said in a phone interview. “But TomTom’s management has always been quite clear that they want to build the company independently.”

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