TomTom said Wednesday it will raise its offer for the digital maps company Tele Atlas to €2.9 billion ($4.2 billion), hoping to edge out rival GPS products maker Garmin.

TomTom and Garmin have been in a bidding war for Tele Atlas, which provides the type of digital maps essential for both companies' Global Positioning System (GPS) products. At the same time, Nokia is buying Navteq, the market leader in digital maps and Tele Atlas' main rival.

TomTom, which makes in-car navigation systems, and Garmin, which is best known for handheld products, both license 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 its 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 €2 billion in July. But then Garmin, which had already seen Nokia bid for Navteq, made a counteroffer of €2.3 billion.

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 €2.9 billion, or €2.7 billion 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 year-end, 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.

The IDG News Service is a Network World affiliate.