Personal navigation device maker TomTom NV on Wednesday won European Union approval to buy mapmaker Tele Atlas NV, with regulators saying it was unlikely the deal would limit competition.
Netherlands-based TomTom is offering 30 (US$46.21) per share for Tele Atlas NV, valuing the company at 2.9 billion (US$4.5 billion).
TomTom says the merger will make Tele Atlas maps better by updating them with information from TomTom users in the field, and benefit TomTom users by giving them instant access to the updated maps.
The deal received extra scrutiny from the European Commission because of fears a TomTom-Tele Atlas combination would be able to hike prices or limit access to the digital maps used by other portable navigation device makers.
Shortly after TomTom first bid for Tele Atlas, Nokia Corp. followed with a US$8.1 billion bid for Tele Atlas's only major rival, Chicago-based digital mapmaker Navteq Corp. That deal is still under investigation by EU antitrust regulators.
"The Commission found that the merged company would be unlikely to pursue (anticompetitive) strategies because its ability to restrict access to digital maps ... would be limited by the presence of an upstream competitor, Navteq," it said.
Also, the new company "would have no incentive to restrict access to digital maps because the sales of digital maps lost by Tele Atlas would not be compensated by additional sales of personal navigation devices," it said.
Analysts said the deal will now almost certainly go through. The offer expires May 30.
"We believe it is very positive that the uncertainty regarding the bid has ended, and that TomTom does not have to make any concessions" to regulators, wrote Luuk van Beek of Petercam securities.
"This outcome will allow it to fully carry out its integration plan and realize the maximum strategic benefits from the acquisition."
However, Van Beek repeated Petercam's "sell" advice on TomTom shares due to fears the company's sales will continue disappoint in the short run.
TomTom's first quarter sales fell 22 percent to 92 million (US$147 million) from a year earlier: although volumes rose, average selling prices dropped to 117 (US$187) per device.
Tele Atlas shares were up 2.4 percent to 29.85 (US$45.98) Wednesday, while TomTom shares were down 0.3 percent to 25.95 (US$39.97) in Amsterdam.
The approval signals the likely end of a dynamic round of consolidation.
After Nokia's bid for Navteq, TomTom's major U.S. rival Garmin Ltd. also bid on Tele Atlas.
TomTom responded by increasing its initial offer price for Tele Atlas by almost 50 percent. Garmin then signed a long-term deal with Navteq guaranteeing access to its maps for the coming decade, and dropped out of the bidding.
