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Feb 10 Alibaba Group Holding Ltd,
China's largest e-commerce firm, offered to buy AutoNavi
Holdings Ltd in a deal valuing the Chinese digital
mapping and navigation firm at $1.58 billion.
Alibaba, which already owns 28 percent of AutoNavi, has been
trying to expand its product line-up to better compete with
Chinese rivals Tencent Holdings Ltd and Baidu Inc
Baidu started offering its map software for free last
August, challenging AutoNavi's dominance in the Chinese
AutoNavi followed suit by offering its own navigation
software for free.
"The market for navigation and map applications and services
has become increasingly challenging ... ," Alibaba said in a
letter to AutoNavi, arguing that its proposal provided value
that would be difficult for it to achieve on its own.
AutoNavi, which has not reported fourth-quarter results,
posted year-on-year declines in revenue in each of the first
three quarters of 2013. Revenue for the first three quarters
totaled about $110 million.
More than half of AutoNavi's revenue comes from licensing
map data for dashboard navigation systems used in cars.
Customers include Audi, BMW and General
AutoNavi, which went public in 2010, also provides map
software for Samsung Electronics Co Ltd's
smartphones as well as services to China Mobile Ltd
and Google Inc.
AutoNavi said on Monday that Alibaba had offered to buy the
72 percent of the company that it did not own for $21 per
American depository share, or $5.25 in cash per ordinary share.
The offer represents a premium of 27 percent to AutoNavi's
ADR close of $16.54 on the Nasdaq on Friday.
AutoNavi shares were trading slightly below the offer at
$20.57 in early trading on Monday.
The company's shares have risen about 47 percent in the past
year. The stock was trading at 39 times earnings for the last
four quarters, more than double that of other navigation device
makers such as Garmin Ltd and TomTom NV.
The proposed buyout follows a series of deals in the
fast-growing Chinese technology sector.
Alibaba, which is expected to go public in the United States
this year, bought a stake in Sina Corp's microblogging
service Weibo, the Chinese equivalent of Twitter, last April.
Alibaba, which is 24 percent owned by Yahoo Inc,
announced its 28 percent stake in AutoNavi in May.
AutoNavi said it would form a committee including financial
and legal advisers to consider the offer, which Alibaba plans to
fund with cash on hand.
Alibaba runs Taobao Marketplace, China's largest
consumer-focused e-commerce website; business-to-business
commerce platform Alibaba.com; and Alipay, a PayPal-like online
(Reporting By Sampad Patnaik and Chandni Doulatramani in
Bangalore; Editing by Saumyadeb Chakrabarty)