Facebook’s proposed $1 billion acquisition of the satellite navigation startup Waze appears to have hit a major snag, according to reports in Israel. The daily newspaper Calcalist is reporting that the talks, which were said to be in their “final stages”, have broken down following a row over the relocation of the company’s R&D center and some of its employees. Simply put, Facebook are demanding the whole operation is upped and moved to the US, while Waze wants to stay put at home.

According to Calcalist, Waze CEO Noam Bardin, alongside co-founders Amir Shinar, Ehud Shabtai and Uri Levine, are all adamant that Waze’s main development center stays where it is, along with the 100-odd employees working there. They’re even threatening to pull the plug on the deal if Facebook sticks to its demand that Waze liquidate all of its activities at home.

The disagreement has apparently been complicated by the shareholders getting involved. BlueRun Ventures, which owns 19% of Waze, and Horizons, which has an 11.6% stake, are both pressing for the deal to go ahead at all costs – meanwhile, Magma Fund (17.6%) and Microsoft (10.2%), are reportedly trying to negotiate a solution acceptable to all parties.

At this stage its not clear what kind of compromise might be made, but given how highly Facebook values Waze it would be a surprise if the acquisition was derailed at this late stage. Its still not clear exactly why Facebook wants to take over the navigation app service so badly, but there was lots of speculation last week, including that it might somehow integrate the service with its Graph Search function.

In the interim, Business Insider has spoken to a number of ‘insiders’ and came up with three good reasons for the acquisition, each of which seem very plausible:

Maps – Facebook desperately needs its own mapping service if it doesn’t want to be left behind. Business Insider’s first source explains that while the likes of Google, Apple and Microsoft all have their own maps, Facebook doesn’t. Moreover, Waze’s unique ‘crowdsourced’ map would seem like an especially good fit for Facebook, given the number of users that are happy to share their data. Add the one billion or so Facebook users to Waze’s existing user base, and that’s one hell of an accurate map you have right there (imagine all those Waze heads replaced by Chat Heads), helping to boost Facebook’s local search and mobile monetization no end.

Find Your Friends – For all that its used, Facebook’s location service kind of sucks, being totally reliant on people remembering to ‘check in’ at places whenever they go somewhere new. With Waze, this is done automatically, and so Facebook will instantly know where everyone is, so long as its users agree to use its location services. This feature would work well if it was integrated with Graph Search, or alternatively Facebook could use it to send ‘alerts’ whenever one of your friends happens to turn up near you.

News – The last theory is that Waze will help Facebook to evolve its main feature, the News Feed. It’s no secret that Facebook wants to know all about you so that it can determine exactly what kind of news you see in this feed, and knowing where you are and how its content (and ads, we presume) relates to this will only serve to enhance that.

The bottom line is that Waze’s technology, when integrated with Facebook, could lead to a sharp rise in mobile usage – and as we know, that’s the Holy Grail Facebook has been chasing for some time now.