UPDATE: Alibaba has been in touch and the deal is now confirmed. The e-commerce giant is paying $294 million for a 28 percent share of AutoNavi. In addition, the companies will work together on e-commerce opportunities:

AutoNavi announced that the company and several entities affiliated with Alibaba Group have agreed to form a strategic alliance to jointly explore and develop location-based e-commerce opportunities. In addition, AutoNavi announced that the parties have entered into definitive agreements whereby Alibaba, through a wholly owned subsidiary, will invest approximately $294M in newly issued preferred and ordinary shares of the company, representing approximately 28% of the company’s total issued and outstanding shares on a fully-diluted basis.

This week’s confirmation of Baidu’s much-speculated $370 million acquisition of PPS Video shows that there is very often no smoke without fire in China’s tech world. The latest speculation of a major deal is that e-commerce giant Alibaba has acquired a majority share (of up to 30 percent) in Beijing-based auto navigation firm AutoNavi, China’s top mapping platform.

Sina Tech — via Sinocismreports that Alibaba is planning to announce the deal on Monday. Citing numerous anonymous sources close to the deal, the publication speculates that Alibaba’s investment will give it a 20-30 percent stake in Nasdaq-listed AutoNavi, although it does not provide an estimated price.

Alibaba declined to comment on the report, telling TNW that “as a matter of company policy we do not comment on rumors and speculation of this nature.”

The deal follows speculation last month that Alibaba, Baidu and Tencent — China’s big three Internet firms — are each taking admiring glances at AutoNavi, That talk is of little surprise given AutoNavi’s dominant position in China’s GPS space.

Its mapping app, which competes with those of Google, Baidu and others, is hugely popular and passed 100 million downloads in January. Research firm Analysys ranks the firm at the top of China’s mapping space, with 45 percent market share.

As well as producing an app of its own, AutoNavi has deals with a range of consumer-focused companies, including Apple — for its oft-criticised map service — Microsoft (Bing), Baidu and Sina. The firm is listed on the Nasdaq after completing a $100 million IPO in 2010.

On paper, the deal makes plenty of sense since for Alibaba, since its Taobao service made a quiet foray into maps last year. Getting on board with AutoNavi would massively strengthen that service, which is one platform that Alibaba is raising as it bids to extend its presence beyond its hugely successful e-commerce business — which makes more money than Amazon and eBay combined.

It’s also not a surprise that Alibaba is keeping quiet on the deal today. The firm is hosting a big media day to celebrate Taobao’s ten year anniversary, and confirming a deal like this would take attention away from that. A Monday announcement would seem more likely, assuming that the news is true, of course.

Headline image via Peter Parks / Getty Images