TomTom has announced that it plans to buy its map supplier, Tele Atlas, for a cash sum of $2.5 billion dollars (or $1.8 billion euros). This amounts to 21.25 euros per share for Tele Atlas which is a 32 percent premium over the company’s average share price over the last three months. Tele Atlas is one of the industry’s main suppliers of digital maps and provides mapping information to Google for their Google Maps service.

TomTom is making this move to diversify its holdings and increase sources as revenue as profit margins from navigation equipment is expected to decrease over time. The purchase offer is supported by Tele Atlas which means there should be little resistance from this making this offer go through.

While this is certainly a win for TomTom from a profit margin standpoint, Tele Atlas could end up losing some customers – especially companies that compete directly with the TomTom hardware business. Shares of rival company Navteq also went up as a result of this offer.

For more information, read this News.com article.

[Check it out]

[Check out the press release]

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