Chinese digital mapping and navigation firm AutoNavi Holdings Ltd AMAP.O agreed to be acquired by e-commerce firm Alibaba Group Holding Ltd IPO-ALIB.N in a deal valuing the company at about $1.5 billion.
AutoNavi said the company's shareholders will receive $5.25 per ordinary share, or $21 per American Depositary Share. The offer represents a premium of 4.7 percent to AutoNavi's closing price on the Nasdaq on Thursday.
The deal, expected to close in the third quarter, would help Alibaba increase revenue by integrating AutoNavi's technology and data on location of establishments into maps, allowing customers to access peer review of shops and restaurants and pay for goods before arriving at a shop.
Lazard advised AutoNavi, while Deutsche Bank advised Alibaba.
AutoNavi was the leading mobile map service by the number of users with 31.3 percent share of the market, as of the third quarter of 2013, according to Beijing-based Analysys. Baidu Inc (BIDU.O) followed with 26.6 percent.
AutoNavi provides map software for Samsung Electronics Co Ltd's (005930.KS) smartphones as well as to China Mobile Ltd (0941.HK) and Google Inc (GOOG.O).
Alibaba, which owns 28 percent of AutoNavi, offered to buy the company in February to better compete with rivals Tencent Holdings Ltd (0700.HK) and Baidu, as China's biggest internet firms continue to chase growth by buying online businesses.
Alibaba, valued at around $140 billion, is expected to go public later this year in the United States in the largest IPO since Facebook Inc's (FB.O) debut in 2012.
AutoNavi's shares were up 2.5 percent at $20.56 on the Nasdaq on Friday.
(Reporting by Soham Chatterjee; Editing by Don Sebastian)