Alibaba Group Holding Ltd (阿里巴巴) bid for the rest of Chinese mapping company AutoNavi Holdings Ltd (高德地圖) as billionaire Jack Ma (馬雲) steps up competition with Baidu Inc (百度) and Tencent Holdings Ltd (騰訊) to gain mobile Internet users.
The cash offer is worth US$21 for each American depositary receipt, valuing AutoNavi at about US$1.6 billion, according to a statement on Monday. AutoNavi, which is 28 percent owned by Alibaba, said the bid will be considered and no decision had been made.
Alibaba, said to be preparing for an initial public offering (IPO), is seeking to win more of China’s 618 million Internet users with services for smartphones and tablet computers. Buying AutoNavi would give China’s largest e-commerce company control of the nation’s most-popular mobile mapping service to challenge Baidu Maps and also add tools to compete with Tencent for services such as taxis and restaurant recommendations.
“Alibaba is trying to compete with Tencent for location-based services,” Hong Kong-based Guotai Junan International Holdings Ltd analyst Ricky Lai said. “Buying AutoNavi fully will help better integrate and monetize the business.”
American depositary receipts in AutoNavi surged 24 percent to US$20.57 at the close in New York, the biggest gain since the shares were sold to the public in June 2010. The offer is 27 percent higher than the closing price on Friday.
“There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated,” AutoNavi said in a statement.
Beijing-based AutoNavi had approximately 77 million active users of its free mobile map apps as of the end of the third quarter last year.
Jessica Himmel of Ogilvy Financial, a Beijing-based spokeswoman representing AutoNavi, today referred questions about the deal to company statements, which said AutoNavi intends to form a committee of independent directors to consider the proposal.
The company had more than 31 percent of the Chinese market for mobile map apps at the end of the third quarter, compared with about 27 percent for Baidu and 7.6 percent for Google Inc’s service, according to an investor presentation.
Alibaba said it was prepared to “promptly” negotiate and finalize an agreement, and it does not expect a lengthy due diligence process.
“The market for navigation and map applications and services has become increasingly challenging, as several larger, well capitalized Internet players in China have become major competitors,” Alibaba said.
The offer is the latest proposed deal from Alibaba, which has been valued at an average of about US$150 billion as it considers moving toward the biggest IPO since Facebook Inc.
In the past year, Alibaba has bought a stake in Sina Corp’s (新浪) microblogging Web site Sina Weibo (新浪微博) as well as investments in luxury-sales Web site 1stdibs.com Inc and retail Web site ShopRunner Inc.