EU seen clearing TomTom's TeleAtlas buy: sources

By David Lawsky

BRUSSELS (Reuters) - TomTom (TOM2.AS), Europe's biggest maker of car navigation devices, is expected to win unconditional European Commission approval to buy its main supplier Tele Atlas TA.AS, industry and other sources say.

The Commission's decision is expected to answer critics' concerns that approval would leave TomTom in a position to hurt rival makers of navigation devices that also buy from Tele Atlas.

TomTom shares jumped following the news. They led gainers in the DJ Stoxx European technology index .SX8P and were up 9.4 percent at 22.59 euros by 1104 GMT (7:04 a.m. EDT). Tele Atlas shares were 6 percent higher at 27 euros, 3 euros below TomTom's offer price.

A TomTom spokesman would not comment other than to say the company was in a "constructive dialogue" with the EU Commission.

The Commission, the European Union's top competition regulator, will announce its decision on the deal between the two Dutch companies by a May 21 deadline. U.S. antitrust authorities cleared the transaction last year.

Tele Atlas provides mapping data to a number of makers of car navigation devices, and to online mapping websites such as those of Google (GOOG.O) and Yahoo (YHOO.O). It also sells to car makers, governments and others.

Tele Atlas is one of two major makers of digital maps worldwide, along with Navteq NVT.N.

Nokia (NOK1V.HE), the world's largest maker of mobile phones, has asked the Commission for permission to buy Navteq for $8.1 billion and is scheduled to get a reply by August 8.

"The Commission never comments on ongoing merger investigations," Commission spokesman Jonathan Todd said in reference to the TomTom deal. "A decision will be taken by May 21."

BIDDING WAR

TomTom's U.S. rival Garmin (GRMN.O) opened a bidding war last year for Tele Atlas, forcing TomTom to raise its offer to 2.7 billion euros ($4.3 billion) from 1.8 billion, net of cash.

The enterprise value of the bid jumped from 28 times core earnings to 41 times earnings.

Opponents say TomTom will treat rival makers of navigation devices unfairly, giving them inferior products or uncovering plans they disclose to Tele Atlas to help with new designs.

Such arguments fell short. TomTom has argued that if it hurt its customers, they would go to Navteq.

TomTom has had to borrow so much money to buy Tele Atlas that it will need to keep attracting new business, said one industry source with no connection to TomTom.