Alibaba to buy Chinese digital mapping firm AutoNavi in $1.5 bn deal

Alibaba Group, China's largest e-commerce company, yesterday struck a deal to buy AutoNavi Holdings Ltd, in a deal that values the Chinese digital mapping and navigation firm at about $1.5 billion.

The deal comes less than a year after Alibaba, run by Jack Ma, acquired a 28-per cent stake in AutoNavi for $294 million. (See: Alibaba buys 28% in Chinese map-nav firm AutoNavi)

AutoNavi shareholders will receive $5.25 per ordinary share, or $21 per American Depositary Share, a premium of 4.7 per cent to AutoNavi's yesterday closing price on the Nasdaq Stock Exchange.

Beijing-based AutoNavi, which completed a $100-million IPO in 2010, is the most popular mapping app in China and competes with Baidu and others.

It has a comprehensive nationwide digital map database that covers approximately 3.6 million km of roadway and over 20 million geographical points of interest across China.

Through its digital map database and proprietary technology platform, AutoNavi provides integrated navigation and location-based solutions for the Chinese market, including mobile location-based solutions and Internet location-based solutions, automotive navigation solutions, and public sector and enterprise applications.

AutoNavi, which holds a 31.3-per cent market share, has business deals with other tech companies like Apple, Micosoft's Bing, Samsung Electronics, Chinese search giant Baidu and Sina.

It provides its mapping and navigation for Samsung Electronics smartphones, built-in data in Apple iOS 6 and Google users in China, as well as mapping services to Baidu.

The deal will allow Alibaba, which is expected to go public later this year in the US with a valuation at around $140 billion, to better compete with local rivals Tencent Holdings and Baidu.

Jack Ma and his team are taking rapid steps to consolidate Alibaba's position as a conglomerate, across the widening reaches of China's booming entrepreneurial economy. Ma told Bloomberg Businessweek in an interview in 2012 that the company would be totally different in the next five years.

He added, the team at Alibaba wanted to build up a company in Chinese history that nobody had seen before.

The first three months of the year saw Ma make deals at a scorching pace. Many but not all of them also aim to rival Tencent, currently considered Asia's largest Internet company.

Last month, Alibaba announced its intention to spend HK$6.24 billion ($804 million) to take a controlling stake in ChinaVision Media, a Hong Kong-listed company that, among other things, owned the Chinese rights for mobile TV broadcasts of English Premier League soccer. The deal would give Alibaba a massive library of movies, TV shows, and sports broadcasts, even as it kept the programming out of Tencent's hands.

Alibaba had also invested aggressively in gaming and instant messaging, two services that had not been central to Ma's vision for Alibaba until late last year. It also acquired an 18-per cent stake in Sina Corp's microblogging site Weibo.com for $586 million.