TomTom, a navigation and digital maps company, announced its decision to sell its Telematics business to Japan’s Bridgestone for $1.03 billion in cash.
Telematics accounts for around a half of TomTom’s 1.89 billion euro market capitalization, Reuters reported. Telematics has 670 employees.
TomTom CEO Harold Goddijn said: “We will continue to invest in our innovative map-making system, enabling faster map updates while lowering operational costs, paving the road toward autonomous driving.”
Amsterdam-based TomTom faces a turning point after Google broke into the market to supply maps to carmakers last year, striking deals with Renault and Volvo and upsetting a duopoly between TomTom and its traditional larger rival HERE.
“Google’s entry is scary,” Harold Goddijn told Reuters.
A key reason cited previously by TomTom for Google’s contract wins was drivers’ desire to use a familiar, easy interface in their cars that is similar to the ones they are familiar with from their cell phones.
Goddijn said that car companies are “not prepared to surrender and roll over”, allowing Google to “own the dashboard” and relegate carmakers to a low-margin manufacturing role.
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TomTom, which is debt-free, will return 750 million euros of the Telematics proceeds to shareholders via a capital repayment and keep 160 million euros to fund further development of its mapping and navigation technology, which is used in Apple maps, among others.
Barclays acted as exclusive financial advisor to TomTom on the Telematics sale, with Lazard acting as independent advisor to the supervisory board. Morgan Stanley advised Bridgestone.
The acquisition of TomTom Telematics will accelerate Bridgestone’s strategy in becoming a mobility solutions leader in Europe. Bridgestone has already identified digital mobility solutions and fleet solutions as a strategic priority.
Bridgestone has also launched digital solutions and applications such as Tirematics, Mobox, FleetPulse and Bridgestone Connect – based on capabilities in data collection from sensors, data platforms and analytics.
TomTom Telematics has an installed user base of 860,000 vehicles of which more than two thirds are commercial. Its premium digital offering include WebFleet and NextFleet. It handles over 800 million GPS positions, 3.3 million trips, and 200 million inbound messages per day.
TomTom said it intends to use the remainder of the proceeds to reinvest in its core business selling digital maps to car-makers, which is under competitive pressure. TomTom had been the smaller member of a duopoly with HERE, owned by German car-makers — until Google entered the market in September.
Google, the U.S. technology giant, has won contracts from TomTom customers Renault-Nissan and later Volvo, leading some to question whether TomTom can compete as a small, independent company.