UPDATED 11.10 BST: Nokia confirmed the sale of its mapping business HERE to a consortium of German car makers – Audi, BMW and Mercedes-manufacturer Daimler – for €2.8 billion ($3.1 billion).

The announcement brings to an end months of speculation surrounding the fate of the business.

In April Nokia admitted it was conducting a strategic review of HERE, and the weeks since have seen a number of companies linked to the deal; taxi hailing app Uber was reported to have partnered with Chinese search giant Baidu on a bid, while Chinese firms Tencent and NavInfo and Sweden’s EQT Partners AB were also believed to have been interested. Facebook was also an early contender. The strong interest in the deal helped pushed the price up from an initial figure of around €2 billion.

Although the transaction has an enterprise value of €2.8 billion, it includes the assumption of nearly €300 million in HERE liabilities. Nokia said it expects to book a gain on the sale, including cumulative foreign exchange translation differences, worth around €1 billion.

The successful German consortium had been favourites to acquire the business. Only last week Daimler’s CEO confirmed the mapmaker would become an open platform if the bid is successful, suggesting that rival automotive firms such as Fiat Chrysler, Renault, Peugeot, Ford, Toyota and General Motors could also invest in HERE.

Indeed, a statement today from Daimler added: “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. The three partners will each hold an equal stake in HERE; none of them seeks to acquire a majority interest.”

It continued: “The management of HERE will continue to be independent – with the goal of moving the HERE business case forward as a platform, open to all customers. The consortium will not interfere into operational business.”

An analyst note from IHS sheds light on how this open platform model may work: “The most likely answer is an industry consortium supported by an initial fee, as well as an annual fee for both membership and to support ongoing costs in R&D, collection and maintenance of high definition maps in exchange for open access to the maps provided by the consortium.  Those not part of the consortium are expected to pay a normal licensing fee as they would today.”

The deal is expected to shake up the mobile market in a big way. As IHS points out, HERE is only one of two companies supplying navigable maps at global scale (along with TomTom) as an alternative to Google and Apple. “Mobile companies – many with consumer-facing mobile clients including Facebook, Amazon, Microsoft, Baidu and Samsung – see an independent mapping solution as critical in order to compete with Google for mobile advertising dollars,” notes the analyst firm.

Commenting on the sale, HERE’s president Sean Fernback said: “I believe today’s announcement is a very good outcome for HERE, its customers and employees. The new ownership structure of HERE will allow us to accelerate our strategy, further scale our business and fulfill our intent to become the leading location cloud company across industries.”

“Renewed Nokia”
Nokia CEO Rajeev Suri was keen to highlight how the former mobile handset giant is now a very different company: “With this step we complete the latest stage of Nokia’s transformation. We integrated the former Nokia Siemens Networks, divested our Devices & Services business, and have now reached agreement on a transaction for HERE that we believe is the best path forward for our shareholders, as well as the customers and employees of HERE. Going forward, we will focus on our planned combination with Alcatel-Lucent. Once that is complete, Nokia will be a renewed company.”

The sale of HERE – expected to close in the first quarter of 2016 – will see Nokia consist of two businesses: Nokia Networks (mobile network infrastructure and services) and Nokia Technologies (licensing and tech innovation).

Sales for HERE in the most recent second quarter increased 25 per cent to €290 million, with the company noting a “24 per cent growth in new vehicle licences for embedded navigation systems”. It also shifted to an operating profit (non-IFRS) of €27 million, compared with breakeven last year. The unit had 6454 employees as of end-June.

IHS expects HERE will generate revenue from automotive map licensing in excess of €600 million in 2015, in addition to revenue from industries beyond automotive. The same forecast estimates that TomTom will generate approximately €64 million in revenue through automotive map licensing with automotive OEMs.

Nokia built its mapping and location business on the back of an $8.1 billion acquisition in 2008 of US-based Navteq, a maker of geographic information systems used in the automotive industry. It was Nokia’s largest deal ever, prior to the planned Alcatel-Lucent merger.

HERE provides mapping and location intelligence for nearly 200 countries in more than 50 languages.

General Atlantic
Separately, Reuters reported this morning that buyout group General Atlantic could take a stake in the mapping business later this year, citing “a person familiar with the transaction.” No further detail was given.