Google said to be buying Waze for $1.1 billion

It's the business deal of the year, if it goes through, and if regulators abroad don't tie it up in anti-trust regulations. According to various business news sites, Internet giant Google is in the final stages of acquiring Israeli company Waze, developer of a crowdsource navigation application, for $1.1 billion.

Bloomberg, quoting an unnamed source close to the deal, reported that the deal could be announced later Monday.

As of Monday, Waze has refused to respond to reporters' queries. A spokesman for Google said that "the company is not responding to rumors or assessments."

A buyout has been in the works for several months, with different buyers showing interest at different points. First it was Microsoft, then Apple, then Facebook and now Google. In each case, both parties to the negotiations denied it was happening, but it seems that negotiations may have ripened into an actual deal.

Google was persuaded by Waze's substantial dowry -- between 45 and 50 million users. Each month, another 1.5 million smartphone users download the application. Joining forces with Google seems to be the best fit, even though Waze works in close cooperation with Facebook. While Google does have its own maps application, it lacks the crowdsourcing aspect, which Waze is very good at.

The idea behind Waze was born when Ehud Shabtai received a handheld computer with external GPS that included navigation software. He was disappointed that the information on the device failed to reflect recent road closings and road construction as well as traffic jams.

As an open source developer, Shabtai started to build the first dynamic navigation platform to integrate GPS, open-source software and a community of drivers. He did this to reflect in real time and in an accurate way traffic conditions and other relevant information required by drivers.

In 2006, Shabtai launched his first mapping application, FreeMap, and two years later he joined up with entrepreneurs Uri Levine and Amir Shinar to establish Waze. After three years of development, the first version of the application was born, in Raanana. Over the first two years, as Waze was used by more and more Israeli drivers, the application improved. It learned how to integrate traffic jams and other layers of information, and in the last year it became the navigation standard for most drivers in Israel.

Facebook misses out

According to rumors circulating last month, Facebook insisted on moving Waze's Israeli development team to their campus in Menlo Park, California, while the Israeli developer wanted to keep the development team in Israel.

With Google the problem is easier to solve, as Google already has several development centers in Israel, some of which are the headquarters of companies it has already acquired. If and when the transaction is complete, Waze will turn into another development center for Google in Israel.

Thus far, $70 million have been invested in Waze, including by the Israeli venture capital funds Vertex and Magma, the Silicon Valley based Kleiner Perkins Fund and Sir Li Ka-shing's Horizons Ventures. Ka-shing also owns the Chinese company Hutchison Whampoa Limited. Ka-shing only became an investor a year and half ago.

The big earners from the deal will be the company's three founders and CEO Noam Bardin, who will become multi-millionaires. The other staff at the company's headquarters in Raanana will come out much wealthier as well.

Nor will the government lose out. Should the deal go through, the government is expected to earn about a billion shekels in taxes. The tax earnings will depend on the price and the final structure of the deal.

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