E-commerce firm Alibaba has announced it has signed an agreement to acquire Chinese digital map content provider AutoNavi Holdings for $1.5bn.
The deal, which is expected to complete in the third quarter of 2014, will help Alibaba increase its revenue through tapping AutoNavi’s mapping technology expertise, helping it compete with other major players in the local market such as Tencent and Baidu.
AutoNavi chairman and chief executive officer Congwu Cheng said the transaction is believed to maximise value for the company’s shareholders.
"We also believe that Alibaba is a great home for our employees and customers and that Alibaba will be able to provide us with great resources and strategic benefits to increase adoption of our location-based services in the China mobile Internet ecosystem," he said.
Under the deal, shareholders of AutoNavi will receive $5.25 in cash per ordinary share or $21 in cash per American depositary share of the company.
Alibaba chief executive officer Jonathan Lu said of the deal, "As a result of this transaction, we believe AutoNavi will continue to be a strong player in an increasingly competitive map applications and local services market."
The acquisition is subject to customary closing conditions and approval from at least two-thirds shares of the Company.
Alibaba already owns over 28% in AutoNavi, and following the acquisition, the company will operate as a wholly-owned subsidiary.
