Nokia to Buy Navteq (NVT)

Nokia (NOK) announced today it is buying Navteq (NVT), a GPS related play.

• Nokia Corp., the world's largest maker of mobile phones, on Monday said it's agreed to buy navigation-software maker Navteq Corp. for $8.1 billion.
• The Finnish phone maker will pay $78 a share in cash for each Navteq share, including outstanding options. The price represents a 34% premium to Navteq's share price a month ago. The deal has been approved by the boards of both companies and is expected to close in the first quarter of 2008.
• "The deal will strengthen Nokia's position in the GPS/maps market. Given the big push around this area, this move makes sense," said Carolina Milanesi, research director in the mobile devices and consumer services practice of Gartner.

While the fund has not held a position in Navteq, it is essentially one of the two main ways to play the GPS trend; Garmin (GRMN) being the other. Navteq is interesting in that it literally creates the GPS databases - so its definitely a unique niche company with no pure play comparable.

What is interesting is this buyout puts no premium on the shares of Navteq as the stock closed at $77.97 Friday and lo and behold Nokia's offer price is $78 (amazing how that works out eh? No insider info on Wall Street or anything). However this is a 34% premium from last month's price of Navteq. One strategy might be to buy Navteq and hope for a competing offer.

What does this deal value Navteq at? $78 = 51x 2007 estimates and 40x 2008 estimates. While Garmin is not a pure play competitor (see this discussion back in mid August), it is valued at 35x 2007 and 30x 2008 estimates.

I sold Garmin (GRMN) last Wednesday - interestingly Garmin (GRMN) is down 5% in premarket.

No positions