Dutch navigation systems company TomTom plans to buy its main supplier of digital maps, Tele Atlas N.V., for 2 billion euros ($2.8 billion) in cash, the companies said on Monday.
TomTom, which also announced quarterly results a week early that showed net profit leaped 81 percent from a year earlier, said it intends to make a cash offer of 21.25 euros per share bid for Netherlands-based Tele Atlas. TomTom will fund the acquisition with debt and cash, TomTom Chief Financial Officer Marina Wyatt told reporters on a conference call.
The transaction will be accretive on a cash basis within 12 months of completion of transaction, Wyatt said.
Tele Atlas supplies map images and data for online mapping Websites such as Mapquest and Google Inc., as well as navigation system makers and mobile phone makers like Nokia.
TomTom Chief Executive Harold Goddijn said Tele Atlas would continue to supply maps for TomTom navigation devices and also continue to supply others with digital maps.
TomTom, which joined Amsterdam's blue-chip index last year, kept its 2007 sales forecast of 1.6-1.8 billion euros and said it expects to sell between 8 to 9 million navigation devices this year.
TomTom said its second-quarter net profit rose to 68 million euros from 38 million a year earlier. Sales rose 37 percent to 380 million euros.
(Additional reporting by Foo Yun Chee and Harro ten Wolde)