Chinese e-commerce giant Alibaba may not be that well known for its maps service, but in 2012 its Taobao service made a quiet foray into maps and last year it paid $294 million for a 28 percent share in Beijing-based auto navigation firm AutoNavi.
Now Alibaba is going all out to strengthen its maps offering, seeking to capture mobile Internet users by building up an ecosystem of various services beyond its hugely successful e-commerce business – which makes more money than Amazon and eBay combined.
To this extent, Alibaba is wooing AutoNavi in a deal that values the top mapping platform in China at about $1.6 billion, as Reuters reports. In a statement released yesterday, Alibaba offered to acquire the whole company for $5.25 in cash per ordinary share — with the assumption that the total number of ordinary shares AutoNavi has stands at 300.4 million shares.
“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 to (AutoNavi),” Alibaba notes in its letter.
This is a clear shot at Chinese search giant Baidu, which has taken its ‘Google of China’ nickname to new heights with its focus on maps. Last year, it introduced Total View, a Street View-like feature for its Baidu Maps service.
AutoNavi’s mapping app competes with those of Google, Baidu and others, and is rather popular in China. Its number of monthly active users hit 77 million at the end of the third quarter last year, as revealed in its earnings report, while the total number of users stood at 171 million.
The company has acknowledged Alibaba’s proposal, and is forming a committee of independent directors to consider the transaction.
If the deal goes through, it would no doubt be a boost to Alibaba’s march in conquering the mobile Internet space — after all, maps are a key part of a typical smartphone user’s habits — and could form a credible threat to Baidu.
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