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Three Internet Giants Bid for AutoNavi, Alibaba May Stand Out

Hearsay evidence shows that Tencent, Baidu and Alibaba are having talks with AutoNavi, the No.1 navigation map provider in China, for acquisition. Why do all the three internet giants want to purchase AutoNavi? Who will laugh at last? Venture Commune Founder Leslie Li wrote a microblog at 10:35 P.M., March 28 that AutoNavi was talking with Tecent, Baidu and Alibaba on investment in turn in whisper. He also told the reporter that the investment means that the three were trying to acquire AutoNavi as a result.

AutoNavi, founded in 2002 with Class A Navigation Digital Mapping & Surveying License and Class A Aerophotography Mapping & Surveying License, is now the No.1 domestic navigation map provider. AutoNavi was listed in NASDAQ on July 1, 2010. The mapping & surveying licenses, Leslie Li says, ratify the power of AutoNavi.

Leslie Li: AutoNavi ranks No.1 among domestic navigation map area. It is a great achievement for it -- In the first place, it needs a strong background and license to do the business. Will the government allow AutoNavi to drive measuring the roads without a license? Muscles are most needed for obtaining and maintaining the license. It is not something you can get when you want to.

Actually, no matter for Google Maps or Apple Maps, the materials they get about China come from AutoNavi. No wonder the company is very valuable, but only Baidu has a mapping business among the three giants. Why do they have the same willingness to buy AutoNavi?

Leslie Li: Maps or navigation apps now rank 5th or even 3rd in mobile phone. And there is still a great space for the future, and in fact it is the portal of mobile internet. Baidu, Tencent and Alibaba have a lot of cash on hand, and AutoNavi can enhance their obtaining capability of data traffic in mobile internet era. Also it will have a great meaning to their extended service in the future. When Alibaba starts logistics business, dymamic positioning and maps are of great importance. Baidu is also a navigation map provider, and the acquisition may be cost effective compared with doing it itself. While Tecent has ambitions for e-commerce and portal grabbing, and even everything, it is more reasonable that it will buy such a strategic thing.

However, why are AutoNavi share holders willing to sell it when it bears a great imaginative space for the future? Why not wait to see it grow? AutoNavi may, as Leslie Li says, have its own difficulties.

Leslie Li: Its sales revenues grow very slowly. As a mobile internet product, you may have 100 million users, but it is a free product like Wechat. It won't make money from future 400 million users, so the share holders feel a little disappointed. If one internet giant would like to give a good bid, it will be a well-reasoned consideration of the deal.

AutoNavi is worth $530 million in view of its closing price at $10.81. How much will it sell to get the deal done? An Israeli company, similar to AutoNavi yet with a much smaller scale, was known to be sold to Facebook at a rocket high $1 billion.

Leslie Li: There has been a case like this abroad. The Israeli company was invested by LI Ka-shing at its very early stage, and Facebook bought it last year at a rocket high $1 billion. In a sense, no deal is impossible for a listed company.

nterestingly, Qihoo 360 President Zhou Hongyi is an independent director of AutoNavi. Qihoo 360 had many disputes with Tencent and Baidu these two years. Who will finally make the deal then? Some netizen comments that Baidu has its own map product now and the relation between Tecent and 360 is known to all, so Alibaba may laugh at last for its logistics business upgrading.

The reporter tries to communicate with the four companies for more information. Alibaba PR Leader Gu Jianbing answered with no comment for the hearsay. And the other three even answered the call. As to who will strike the deal with AutoNavi, Venture Commune Founder Leslie Li also believes that Alibaba may stand out because it gives the best price.

Leslie Li: For now, Alibaba has the greatest possibility. Baidu started the talk first, but the bid maybe too high to Robin Li. Tencent, as much as I know, is also under talk. But the most active one and also the highest bidder is Alibaba.

Comment: AutoNavi is the king of the portal! In addition to B2C, AutoNavi has an overwhelming value in LBS of auto industry and e-commerce logistics. For Alibaba, who is constructing intelligent logistics frame network, fully exploiting the advantageous resources of AutoNavi B2B is of top strategic meanings. Auto industry will take on e-commerce as a trend, and AutoNavi unveiled VECAR, an e-commerce try for car owners, in the global biggest Telematics event of Telematics@China Forum four months ago. Alibaba, now labeled an invincible VC, would not give in because dual-portal AutoNavi's would lead to its strategy. If the deal comes true, it will have a great impact on China Telematics and car owner mobile internet.