Alibaba To Acquire AutoNavi For About $1.5 Bln.

(RTTNews) - AutoNavi Holdings Ltd (AMAP), a China-based provider of digital map content and navigation solutions, Friday agreed to be acquired by an affiliate of e-commerce firm Alibaba Group Holding Ltd., in a deal valued at about $1.5 billion.

Alibaba believes the deal will further strengthen AutoNavi's prospects in an increasingly competitive map applications and local services market.

Alibaba will pay $5.25 in cash per ordinary share or $21.00 in cash per American Depositary Share or ADS. The price represents a premium of 27 percent over AutoNavi's closing price of $16.54 per ADS on the Nasdaq on February 7 - the last trading day prior to February 10 when it revealed an acquisition proposal from Alibaba. The offer also represents a premium of 4.7 percent to AutoNavi's closing price on Thursday.

The deal is is expected to close in the third quarter of 2014. AutoNavi's board has approved the deal, recommending shareholders to support it.

AutoNavi believes the deal will enhance shareholder value and provide the company with resources and strategic benefits to increase adoption of its location-based services in the China mobile Internet ecosystem, said AutoNavi CEO Congwu Cheng.

Alibaba beneficially owns about 78.43 million shares in AutoNavi (representing 28.2 percent of the total outstanding shares of the company as of March 31, 2014).

If completed, the deal will result in AutoNavi becoming a wholly-owned subsidiary of Alibaba, and its stock will no longer be listed on Nasdaq.

The acquisition will help AutoNavi compete better with rivals Tencent Holdings Ltd and Baidu.

AutoNavi's solutions are used by Samsung Electronics Co Ltd in its smartphones, China Mobile Ltd and Google Inc (GOOG) as well.

Meanwhile Alibaba, valued at around $140 billion, is expected to go ahead with its U.S. IPO later this year. The Hangzhou, China-based company has been on a buying spree to strengthen its offerings ahead of its IPO.

Earlier this month, Alibaba Group agreed to make a strategic investment of HK$5.37 billion or about $692 million in Intime Retail (Group) Co Ltd in return for a stake in the Chinese mall operator.

Earlier Alibaba agreed to acquire a 60 percent stake in Chinavision Media Group Ltd for about HK$6.24 billion or $804 million to gain access to Chinavision's film and television production.

AutoNavi stock is trading at $20.59, up $0.54 or 2.69%, on a volume of 7.4 million shares on the Nasdaq.