Alibaba Group Holding Ltd. agreed to acquire AutoNavi Holdings Ltd. in a deal that values the Chinese company at $1.5 billion, bolstering its Internet mapping tools ahead of a possible initial public offering.

AutoNavi shareholders will receive $21 in cash for each American depositary receipt, the companies said today in a statement, the same terms that Alibaba originally offered in February. The bid is a 27 percent premium to AutoNavi’s closing price on Feb. 7, before the offer was first disclosed.

AutoNavi will give Alibaba control of China’s most popular mobile mapping service as the nation’s largest e-commerce company prepares for an IPO in New York as soon as this month. Alibaba is trying to win a big portion of China’s 618 million Internet users with more services, and AutoNavi lets it compete directly with Baidu Inc.’s Baidu Maps and with Tencent Holdings Ltd. for taxi and restaurant recommendation services.

With its looming IPO, Alibaba is moving rapidly to bolster its reach with investments in China and abroad. Earlier this month, the company was part of a $250 million funding round for ride-sharing application Lyft Inc. and in March Alibaba said it would invest almost $700 million in Intime Retail Group Co., owner of department stores and supermarkets.

Beijing-based AutoNavi, which is already 28 percent owned by Alibaba, has digital-map databases covering about 3.6 million kilometers (2.2 million miles) of roads and more than 20 million “points of interest” across China.

Mapping Battleground

Ashley Zandy, a spokeswoman for Alibaba, declined to comment beyond today’s statement.

Mapping is becoming a vital battleground for the largest technology providers in the world with companies such as Google Inc. and Apple Inc. stepping up investments. Last year, Google acquired Waze, which help users navigate traffic with smartphones, for almost $1 billion. Apple, a newer player to the market, has made several acquisitions to improve its services, including deals for Locationary, HopStop and Embark.

AutoNavi’s American depository receipts rose 3 percent to $20.65 at the close in New York.

The deal is expected to be completed in the third quarter. AutoNavi shareholders still need to vote on the takeover.

To contact the reporters on this story: Sarah Rabil in New York at; Brian Womack in San Francisco at To contact the editors responsible for this story: Sarah Rabil at; Pui-Wing Tam at

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Photo Credit: Employees stand on a logo of Alibaba (China) Technology Co. Ltd. Carlos Barria / Reuters