Alibaba spends $300M to buy one third of Chinese mapping company

Asian e-commerce juggernaut Alibaba has paid $294 million for a 28 percent stake in AutoNavi, a location, GPS, and mapping company based in Beijing. The end goal, the companies said, is a combination of the two entities’ areas of expertise: physical location and online retail.

In a press release, AutoNavi states it plans “to share certain data, including AutoNavi’s map data and location-related information of the merchants on Alibaba’s e-commerce platforms. … AutoNavi and Alibaba will also cooperate in the areas of map engine, location search, navigation, and cloud computing services and will cross-promote their respective products and services, with a goal of developing new location-based business models.”

The deal itself is structured so that one of Alibaba Group’s wholly owned subsidiaries will purchase 28 percent of AutoNavi’s fully diluted outstanding shares. Alibaba executive vice chair Joseph C. Tsai and Eddie Wu, Alibaba’s mobile product president, will both gain seats on AutoNavi’s board of directors. The deal should close soon pending regulatory approval.

In a statement, Alibaba chief Jack Ma said, “This new alliance reflects our vision for the future of the mobile Internet.”

“With Alibaba’s support, AutoNavi will be able to establish a massive platform of points of interest (POIs) related to the kinds of services our users seek every day,” said AutoNavi CEO Congwu Cheng.

“The alliance will also enable us to create an innovative monetization model by providing consumers with a one-stop service application that integrates merchant information with POIs search, data mining, payment, and other e-commerce activities.”

AutoNavi was founded in 2001 and currently employs 2,000 people. The company had its $100 million IPO in the United States in 2010.

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