NEW YORK (The Deal) -- A German automobile consortium has driven off with a key prize in the race for self-driving car technology, with a winning €2.8 billion ($3.1 billion) bid for telecom-equipment maker Nokia's (NOK - Get Report) Here Communications mapping division.
"The acquisition is intended to secure the long term availability of Here's products and services as an open, independent and value creating platform for cloud-based maps and other mobility services accessible to all customers from the automotive industry and other sectors," they said in a joint statement.
They signaled that they will allow Here continuously to improve its services in future as the volume of anonymized data -- or "swarm intelligence" -- from vehicles increases.
"It is the explicit intention that all Here customers are to benefit from this continuous optimization," they added.
The hope is that the use of swarm intelligence will reduce the risk of accidents by improving the system's ability to warn drivers of hazards such as icy roads, accidents ahead and the formation of traffic jams, and help to form the basis of new assistance systems and ultimately fully autonomous driving.
"Here will play a key role in the digital revolution of mobility, combining high-definition maps and data from vehicles to make travel safer and easier for everyone," said BMW Chairman Harald Krüger.
Also signed up to the joint statement were Audi Chairman Rupert Stadler and Daimler Chairman Dieter Zetsche, as well as the three companies' research and development directors.
The German carmakers said they will split ownership of Here equally, and that none of them seeks to acquire a majority interest. They said the management of Here will continue to be independent and that the consortium will not interfere in its operational business. The transaction is expected to close in the first quarter of 2016, subject to regulatory approval.
Here provides mapping and location intelligence for nearly 200 countries in more than 50 languages. Nokia plans to report Here as a discontinued operation from the third quarter. In the first half of 2015, Here reported an operating profit of €28 million and an operating loss for the whole of 2014 of €1.2 billion, largely due to a goodwill writedown. Here's employee count stood at 6,454 at the end of June 2015.
Daimler spokesman Hendrik Sackmann said the bid trio's auto-industry competitors and other parties using Here's services will be treated as customers, just as they are now, and Here will not be giving the information away free.
"It will be an open platform," he said, "but not open-source."
Sackmann said that Daimler would pay cash for its share. He declined to comment on the consortium's advisers.
Espoo, Finland-based Nokia said it expects net proceeds of just over €2.5 billion from the sale after compensating the buying group for certain liabilities, currently expected to be slightly less than €300 million. It expects to book a gain of about €1 billion from the disposal, which it initiated in April after agreeing to buy Alcatel-Lucent (ALU.
"Going forward, we will focus on our planned combination with Alcatel-Lucent. Once that is complete, Nokia 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," said Nokia President and CEO Rajeev Suri in a statement.
Nokia expects to close its fusion with Alcatel-Lucent in the first half of next year.
The European Commission on July 24 cleared the €15.6 billion Alcatel-Lucent deal, though rumblings of dissatisfaction about the share exchange ratio -- exacerbated by a fall in Nokia's share price since the deal was announced in April -- threaten to complicate the takeover.
Alcatel-Lucent shareholder Odey Asset Management has said the price Nokia is offering is too low, and Elliott Management recently joined the shareholder register.
Laura Board contributed to this report.