(Bloomberg) — TomTom NV has agreed to sell its Telematics fleet management business to tire manufacturer Bridgestone Corp. for 910 million euros ($1 billion), freeing up resources to battle Silicon Valley giants such as Alphabet Inc. for access to mapping technology in car dashboards.
The sale marks a significant step in TomTom’s strategic shift to location technology as customers ditch the personal navigation devices that put the company on the map two decades ago in favor for ones built into smartphones.
In September, TomTom said it was exploring a sale of Telematics, which delivers vehicle-related data and intelligence for fleet management and connected car services. Media reports also identified Verizon Communications Inc., Microsoft Corp., Daimler AG, and Michelin as possible bidders for the unit.
TomTom will return 750 million euros to shareholders by means of a capital repayment, combined with a share consolidation, which is expected in the third quarter of 2019. The Telematics business accounted for 18 percent of TomTom’s 2017 sales.
The deal by Bridgestone is its largest in Europe, according to data compiled by Bloomberg. The world’s largest tire maker is speeding up product development for connected and intelligent cars, combining tires and sensors to collect road conditions and tire information such as the amount of wear.
With the purchase, Bridgestone plans to gather data from 860,000 units of vehicles that currently use TomTom’s digital service to develop products and improve tire maintenance service, it said in a statement to Tokyo Stock Exchange. The sale is expected to close by the end of the second quarter of 2019, and won’t have a major impact on Bridgestone’s current fiscal year earnings, it said.
TomTom’s shares fell as much as 6.2 percent in trading Tuesday, valuing the company at 1.9 billion euros. TomTom shares have racked up losses for three consecutive years starting 2015 as the company suffered challenges and setbacks in its shift away from consumer products.
The battle to offer mapping services is becoming increasingly fierce, with car giants and mapping companies teaming up to take on the tech giants.
German car rivals grouped together with the 2015 acquisition of HERE Technologies, which provides location data for navigation systems, in a bid to thwart Google from seizing a dominant position in digital maps, a key technology for self-driving vehicles and future transportation services.
In November TomTom CEO’s Harold Goddijn said the firm is receptive to more collaboration with automakers and technology companies.
(Updated with shares.)
–With assistance from Ma Jie.
To contact the reporter on this story: Wout Vergauwen in Amsterdam at [email protected]
To contact the editors responsible for this story: Giles Turner at [email protected], Kim Robert McLaughlin
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