Alibaba plots travel sector growth with offer for map service AutoNavi
In May 2013, Alibaba acquired a 28% stake in NASDAQ-listed AutoNavi for $294 million. Now, Alibaba plans to buy the remaining stake, in an all-cash deal.
Alibaba is offering $21 per American Depository Share (ADS), which takes the valuation of AutoNavi to $1.58 billion.
At the time of the offer (before the start of trading on Monday) from Alibaba, the share price of AutoNavi was $16.54. At the time of writing (after the closure of trading day), the share price had increased to $20.57.
AutoNavi has confirmed it has received the acquisition proposal.
Alibaba and AutoNavi share certain data, including AutoNavi’s map data and location-related information of the merchants on Alibaba’s ecommerce platforms, including Taobao Marketplace (an eBay like service in China).
Director of Alibaba, Joseph C. Tsai, says:
“The market for navigation and map applications and services has become increasingly challenging, as several large, well-capitalized internet players in China have become major competitors to the company.”
In August 2013, Baidu offered its map software for free with AuoNavi immediately following suit and offering its navigation software for free. Such is the competition in the China map industry.
A year ago, Tencent launched its Street View-like service (similar to Google Street View) in China, now the service has the most comprehensive coverage in China, with more than 100 cities covered in the system.
Alibaba’s travel industry presence
Taobao launched a dedicated travel portal in 2010 which is positioned in the similar business of Chinese OTA giant, Ctrip.