Alibaba, China's largest e-commerce firm, offered to buy digital map and LBS vendor AutoNavi for $1.58 billion. The all-cash offering represented a premium of almost 40 percent against the stock price in the recent months.
Alibaba, already owns 28 percent of AutoNavi a purchase that was made eight months ago for $294 million, a deal that valued AutoNavi at $1.05 Billion.
In its letter to AutoNavi’s shareholder Alibaba said: “the market for navigation and map applications and services has become increasingly challenging, as several larger, well ca. pitalized Internet player in China have become major competitors to the Company (i.e. AutoNavi). We believe that Alibabab is uniquely positioned to offer superior value to AutoNavi’s shareholders based on our complementary, rather than competitive, business strategies and the potential synergies we can achieve from a full combination.“
AutoNavi has not yet reported their fourth-quarter results, but the company 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. In the third quarter (ended September 30, 2013) Autonavi posted a net loss of $6.7 million, compared to net income of $10.1 million in the third quarter of 2012.
The loss is largely due to marketing expenses ($14.9 million in the third quarter of 2013, compared to $5.9 million the prior year) related to the promotion of their mobile map application. In the quarter this mobile business reported $14.8 million in net revenues, compared to $11.1 million in the third quarter of 2012. Clearly this marketing outburst has not been paying off.
With these financial and market conditions it would be surprising to see AutoNavi’s shareholders declining the cash offer from Alibaba.
[via]
Alibaba, already owns 28 percent of AutoNavi a purchase that was made eight months ago for $294 million, a deal that valued AutoNavi at $1.05 Billion.
In its letter to AutoNavi’s shareholder Alibaba said: “the market for navigation and map applications and services has become increasingly challenging, as several larger, well ca. pitalized Internet player in China have become major competitors to the Company (i.e. AutoNavi). We believe that Alibabab is uniquely positioned to offer superior value to AutoNavi’s shareholders based on our complementary, rather than competitive, business strategies and the potential synergies we can achieve from a full combination.“
AutoNavi has not yet reported their fourth-quarter results, but the company 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. In the third quarter (ended September 30, 2013) Autonavi posted a net loss of $6.7 million, compared to net income of $10.1 million in the third quarter of 2012.
The loss is largely due to marketing expenses ($14.9 million in the third quarter of 2013, compared to $5.9 million the prior year) related to the promotion of their mobile map application. In the quarter this mobile business reported $14.8 million in net revenues, compared to $11.1 million in the third quarter of 2012. Clearly this marketing outburst has not been paying off.
With these financial and market conditions it would be surprising to see AutoNavi’s shareholders declining the cash offer from Alibaba.
[via]
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