TomTom today announced that it will raise its offer for the digital maps company Tele Atlas to €2.9bn. In doing so TomTom wants to edge out rival GPS satnav manufacturer Garmin. Meanwhile Nokia is buying Navteq, the market leader in digital maps and Tele Atlas' main rival.

TomTom and Garmin have been in a bidding war for Tele Atlas, which provides the type of digital maps essential for both companies' products.

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TomTom, which makes in-car navigation systems, and Garmin, which is best known for handheld products, both pay to licence their map services today. But GPS products are becoming more widespread and people are demanding smarter, more up-to-date information.

TomTom said it takes too long to get map updates - several months in the case of Tele Atlas. Buying the company will allow TomTom to provide its customers daily map updates, it said. TomTom and Tele Atlas are both Dutch companies, while Garmin has headquarters in Kansas.

TomTom made the first move for Tele Atlas, offering about €2bn in July. But then Garmin, which had already seen Nokia bid for Navteq, made a counteroffer of €2.3bn.

TomTom has shot back with what it hopes is a decisive blow. It plans to offer €30 per share in cash, valuing Tele Atlas at €2.9bn, or €2.7bn allowing for its cash holdings.

Dirk Snauwaert, a spokesman for Tele Atlas, said the board will meet to consider "all parameters" of the new offer and decide whether to recommend it to shareholders.

TomTom said it expects its offer to be accepted. Under Dutch law, it has cancelled the previous proposal and will make the new offer officially by the end of November. It hopes to close the deal by the end of the year, it said. It will need approval from regulators and Tele Atlas shareholders.

Garmin didn't say if it would raise its offer and try to outbid TomTom again.