EU Keeps Nokia-NAVTEQ Deal Hanging

"After a preliminary review, the Commission has identified serious doubts about the compatibility with the Common Market of the acquisition by Nokia of NAVTEQ because it might, in the light of the duopoly market for navigable digital maps and Nokia's strong position on the market for mobile handsets, lead to a significant impediment of competition within the European Economic Area," the Commission said in a statement.

The multi-billion dollar deal was announced last October and seemed like a good match: Espoo, Finland"based Nokia is the world's largest mobile device manufacturer with more than 900 million customers. Chicago-based NAVTEQ provides digital map data that is installed in cars, and also provides mapping applications to Internet companies such as Google, Yahoo! and MapQuest.

"Location based services are one of the cornerstones of Nokia's Internet services strategy," said said Olli-Pekka Kallasvuo, president and CEO, Nokia, in a statement. "The acquisition of NAVTEQ is another step toward Nokia becoming a leading player in this space. By joining forces with NAVTEQ, we will be able to bring context and geographical information to a number of our Internet services with accelerated time to market. "

Nokia already has a presence in the personal device/ mobile mapping sector: in February, the company unveiled the Nokia 6210 Navigator, its first GPS-enabled mobile device with an integrated compass for pedestrian guidance. The model is the successor to the the 6110 Navigator phone, released in June 2007, and is expected to start shipping in the third quarter in select markets.

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"This is part of the Commission's review process, and does not in any way signal the ultimate outcome," said Rick Simonson, executive vice president and chief Financial Officer, Nokia."We have engaged in an open and constructive dialogue with the Commission in order to find agreement on the acquisition of NAVTEQ. We have listened to the Commission's concerns, and look forward to finding a common understanding that will enable the transaction to be closed. Nokia remains strongly committed to this acquisition, which will play a key role in our Internet services push."

The Nokia/ NAVTEQ tie-up is similar to a proposed merger of TomTom NV, the world's largest maker of navigation devices with mapping company, TeleAtlas NV, a NAVTEQ competitor.

THE EU began looking at the $3.2 billion deal in November 2007, and had expected to finish its investigation by April 17. However, on Thursday, TomTom said it now expects that the inquiry will not be completed until May 21, and announced that it is extending its offer for Tele Atlas until May 30.