After reports last night, the companies have confirmed it: Nokia (NYSE: NOK) has agreed to buy Chicago-based Navteq for $78 per share (a 34 percent premium over the price one month ago), for a total of $7.7 billion (5.4 billion euros) after taking into account cash that Navteq has in the bank ($8.1 billion otherwise). Nokia will finance the acquisition with cash and debt, and it has been approved by the board of directors of each company but is subject to customary closing conditions, including regulatory approvals and Navteq shareholders’ approval. More in extended entry..

Navteq’s service allows electronic mapping for in-vehicle navigation devices and for mobile-phone apps used for shopping, emergency services and advertising. With Navteq Nokia is buying an experienced team, a strong customer base and a map data and technology platform. Nokia will use the acquisition—its biggest ever—to bolster its internet services push, and Olli-Pekka Kallasvuo, Nokia’s President and CEO, indicated Navteq’s technology would be integrated into its other content and service efforts: “By joining forces with NAVTEQ (NYSE: NVT), we will be able to bring context and geographical information to a number of our Internet services”. Nokia will also keep the company’s existing customer base and maintain support for those services, which include automotive navigation systems, internet-based mapping applications, government and business solutions as well as mobile navigation devices. In 2006 Navteq had revenues of $582 million. Release.

Nokia CEO Olli-Pekka Kallasvuo has trying to steer the Finnish giant into a software and services company....on the services side it has bought Loudeye, Enpocket, Twango and other companies in an attempt to help in the content and marketing apps space. The company has an existing relationship with Navteq for phones...Nokia bought into the navigation industry last year when it bought German firm Gate5.

Navteq was founded in 1985 to build turn-by-turn navigation digitized maps. Since then, it has created digital maps in 69 countries across six continents, the story says. It was seen as a takeover target since TomTom, the world’s top maker of car navigation devices, offered in July $2.55 billion for its only big rival Tele Atlas.

FT: Analysts suggested the price was expensive, given that TomTom’s bid for TeleAtlas. However, they noted that Nokia might have been forced to raise its offer to outbid other potential buyers, rumored to have included both Google (NSDQ: GOOG) and Microsoft (NSDQ: MSFT). To justify the price, analysts suggested Nokia would have to work hard to ensure that Navteq retained its customer base. 

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