Alibaba offers to buy out mapping firm for $1.1B

Chinese e-commerce giant offers to buy out remaining 72 percent stake in AutoNavi in a deal expected to be worth US$1.13 billion and US$1.17 billion, if accepted.
Written by Eileen Yu, Senior Contributing Editor

Alibaba Group has offered to buy out the remaining shares in Chinese digital mapping and navigation company, AutoNavi, in a deal expected to be worth about US$1.1 billion.

The largest e-commerce operator in China, Alibaba already holds a 28 percent stake in AutoNavi, which offers a popular mobile mapping app, and is now offering US$21 per American depository share, or US$5.25 in cash per ordinary share, reported Reuters

If accepted, the deal would be worth between US$1.13 billion and US$1.17 billion, putting AutoNavi's value at US$1.58 billion. According to the report, the Beijing-based mapping services provider had been seeing its revenues dip over the past three quarters, and Alibaba was expected to step in to safeguard its investment. Despite the falling revenue, the company was the country's leading mobile map service with 31.3 percent market share in third-quarter 2013, noted Reuters, citing stats from Analysys. Chinese search giant, Baidu, was second with 26.6 percent share. 

The deal could potentially allow Alibaba to integrate data into maps, offering more relevant information to users as well as providing a way to promote its e-commerce merchants and related services. The e-commerce giant, which operates e-commerce sites Taobao and Tmall, clocked a net profit of US$792 million in its latest quarter fueled by higher advertising fees, but its revenue growth slowed to 51 percent. 

Chinese internet giants including Alibaba, Baidu, and Tencent have been buying companies and expanding their portfolio to better address the country's burgeoning online market, which has reached 618 million users, of which 80 percent are on mobile. 

Tencent last month announced plans to invest HK$1.5 billion (US$193.45 million) for a 9.9 percent stake in logistics services provider, China South City Holdings, to beef up its e-commerce business. Baidu in January also unveiled it was acquiring group-buying e-commerce site, Nuomi, with plans to integrate the business with its location-based services.

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