Garmin Makes Bid for Tele Atlas

GPS Maker TomTom has been courting digital mapping company Tele Atlas for months: now rival Garmin has thrown in with a $3.3 billion offer.

Dutch digital mapmaker Tele Atlas has been pursued by Amsterdam-based GPS maker TomTom since mid-year: TomTom announced its intent to aquire the company in July for €21.25 per share—kind of a low-ball bid—and formally announced the offer in early October. The question was whether TeleAtlas shareholders would bite: although Tele Atlas formally endorsed the TomTom offer, Tele Atlas’s shares had been consistently trading above the level of TomTom’s offer, and Nokia’s recent move to acquire competing mapmaker Navteq for some $8.1 billion applied more pressure to the possible deal.

Now, TomTom rival Garmin has thrown its hat into the ring, announcing it has put forward an unsolicitied €2.3 billion ($3.3 billion USD) offer for Tele Atlas, offering a 15 percent premium over the TomTom offer.

"Given the high growth and rapid change the navigation market has undergone to date, we feel that now is the right time for Garmin to move ahead with this proposed combination with Tele Atlas," said Garmin CEO Min Kao, in a statement. "We also intend to make Tele Atlas’ content available to the entire navigation market on a nondiscriminatory basis, promoting healthy competition, with significant benefits to the navigation market and all its consumers."

TomTom is the leader in the European GPS market, but Garmin (based out of the Cayman Islands) has the larger presence in the U.S. and overall world market. Garmin feels its larger market size will provide Tele Atlas’s business more growth opportunity.

Industry watchers are waiting for TomTom’s next move, wondering if a bidding war will erupt between the two GPS makers, which have a history of bitter litigation. After Navteq, Tele Atlas is the only other global digital map maker: if a GPS manufacturer is looking to shift from a hardware-based business to a service model, the company represents the only real way that can be accomplished through acquisition.