TomTom buys Tele Atlas for $2.6b

TomTom, Europe's largest maker of navigation systems for cars, would be acquiring digital mapping company Tele Atlas for 1.9 billion euros ($2.6 billion), an Associated Press report said.

According to the report, TomTom would pay 21.25 euros ($29.33) per share for the Den Bosch, Netherlands-based Tele Atlas will also pay a 28% premium to the company's closing price of 16.55 euros ($22.84) this week.

If successful, the deal would combine Europe's smaller, high-growth rivals with the dominant players in the navigation device and mapping markets: Cayman Islands-based Garmin, which has operational headquarters in Kansas, and Chicago-based Navteq, the report said.

TomTom relies on the data that Tele Atlas gathers in order to present the maps for its displays. Tele Atlas has been increasing sales quickly but was unprofitable until recently, and relies on TomTom for around a third of its revenue, the report added.

According to the report, SNS Securities analyst Martijn den Drijver told Dow Jones Newswires he believed TomTom's offer was low, and recommended that investors buy Tele Atlas shares and reduce TomTom holdings.