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The software giant intends to integrate Multimap with its existing location and mapping service, Virtual Earth.

However, the company says it will be looking at ways of marrying its new acquisition with existing products such as Live Search, Windows Live services, MSN and the aQuantive advertising platform it acquired in August for $6 billion.

The company says Multimap will continue to operate as a separate subsidiary for the time being, though it is considering folding its new acquisition into its Virtual Earth and Local Search product team.

Financial terms of the deal were not disclosed, though reports suggest Microsoft paid around £50 million for the company.

"This acquisition will play a significant role in the future growth of our search business and presents a huge opportunity to expand our platform business beyond the UK and globally," says Sharon Baylay, general manager of the Online Services Group at Microsoft.