TomTom 2008 Annual Report Download - page 75

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/ 73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
OF TOMTOM NV
29. BUSINESS COMBINATIONS
Acquisition of Tele Atlas shares
In the fourth quarter of 2007, TomTom NV made a cash offer of €30.00 per ordinary share for all ordinary shares
of Tele Atlas, totalling approximately €2.9 billion. The company acquired 29.9% of the shares of Tele Atlas for a
total consideration of €816 million. Since TomTom NV did not obtain control over Tele Atlas at that time, the
transaction was classified as an investment in associate.
In June 2008 the Group acquired the remaining shares of Tele Atlas, a global provider of digital map technology.
The acquired business contributed €121 million in revenue and net profit (excluding impairment) of €5.9 million to
the Group for the period from 1 June 2008 to 31 December 2008. If the acquisition had occurred on 1 January 2008,
Group revenue would have been €1,749 million and operating loss would have been €820 million. These amounts
have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary to reflect
the additional depreciation and amortisation that would have been charged assuming the fair value adjustments to
property, plant and equipment and intangible assets had applied from 1 January 2008, together with the
consequential tax effects.
Details of net assets acquired and goodwill are as follows.
(€ in thousands)
Purchase consideration:
– Cash paid 2,834,902
– Direct costs relating to the acquisition 33,678
Total purchase consideration 2,868,580
Fair value of net assets acquired 966,091
Goodwill (note 12) 1,902,489
The goodwill is attributable to the anticipated revenue and cost synergies expected to arise after the Group’s
acquisition and the assembled workforce of Tele Atlas. In the fourth quarter of 2008, an impairment charge was
recognised. For details refer to note 12.
The assets and the liabilities arising from the acquisition are as follows.
Tele Atlas
previous
carrying
Fair value amount
Cash and cash equivalents 233,579 233,579
Property plant and equipment (note 13) 22,852 21,129
Databases 839,519 186,098
Tools 33,390 13,239
Customer relationships 75,000 13,183
Brand name 8,600 0
Investments 7,608 7,608
Inventories 956 956
Deferred tax assets 54,388 17,810
Trade receivables 70,409 70,432
Trade payables (14,422) (14,422)
Other assets / liabilities (103,704) (79,108)
Deferred tax liabilities (262,084) (14,367)
Net assets acquired 966,091 456,137
Total purchase consideration 2,868,580
Shares previously held and accounted for under equity method 801,209
Cash and cash equivalents in subsidiary acquired 233,579
Cash outflow on acquisition 1,833,792
30. RELATED PARTY TRANSACTIONS
On 1 June 2008, TomTom NV acquired the remaining shares in Tele Atlas, the investment in Tele Atlas qualifies as
an investment in a subsidiary.
In the normal course of business, TomTom purchases services from Tele Atlas. These transactions are conducted
on an arm’s length basis with terms that have not changed compared with the terms that applied before we
acquired our interest in Tele Atlas. Refer to note 7 for details of transactions with key management personnel.