Navigation device maker TomTom bought Tele Atlas for 2.9 billion euros ($4.08 billion) last year after a bid war with Garmin. Shortly after that, top handset maker Nokia spent 5.3 billion euros on Navteq.
Values of both Tele Atlas and Navteq were sky-high at the time of the acquisitions as they controlled most of the digital maps market, a key asset at a time when maps are integrated into an increasingly wider offering of different online services.
Now, as the downturn has hit demand for new cars and rising rates have squeezed TomTom’s finances, the joint firm is worth just a quarter of the Tele Atlas price at the time the deal was done.
TomTom shares have risen 30 percent this week due to an exclusive deal to offer navigation on iPhone and market talk of Apple being interested in taking a stake in the firm.
The Navteq acquisition gives Nokia a stronghold in the navigation business, generating cash and boosting growth, but it is also a cornerstone of Nokia’s new push into Internet services, where it expects to benefit from close access to maps.
Takeoff of such location-based services is the key for both Nokia and TomTom to recoup the money spent on acquisitions.