World News: TomTom outbids Garmin for Tele Atlas

World News:  TomTom outbids Garmin for Tele Atlas

After being given five days to match Garmin’s €2.1 billion offer for Tele Atlas, TomTom announced that it had terminated its offer of €21.25 per ordinary share and intended to make a new cash offer of €30.00 per ordinary share, raising the value of the deal to approximately €2.9 billion.

TomTom also announced that it would purchase and acquire approximately 25.8 million ordinary shares of Tele Atlas, representing approximately 28.3% of the company’s issued share capital.

It remains to be seen whether Garmin will bow out or come back with a higher bid for a company in which its competitor is now a 28.3% shareholder and customer.

ABI Research says that this battle for Tele Atlas between Garmin and TomTom will have a powerful impact on the future of not just the portable navigation market, but a broader array of location aware services to be introduced over the next several years.

According to principal analyst Dominique Bonte, the major players in the navigation and location industry are positioning themselves to take maximum advantage of the expected boom in connected PNDs, handset-based pedestrian navigation, and LBS. Owning digital maps – one of the key assets in the industry – is considered critical to acquiring a dominant position.

“Owning digital map technology will allow Garmin to move more quickly than its competitors (time to market is a key competitive advantage),” says Bonte. “As LBS will mainly be offered via GPS-enabled handsets, it will be interesting to see whether Garmin will enter the handset business; the company has not denied recent rumours to that effect. The recently revamped handset-based navigation software, Garmin Mobile XT, may well point in this direction.”

Research director Mike Ippoliti points out that since the markets felt Nokia paid too much for NAVTEQ, they will surely feel the same way if a bidding war for Tele Atlas continues.

“Nokia did not pay too much, but it seems far more likely the winner of Tele Atlas will have overpaid,” says Ippoliti. “More importantly, is this action from Garmin the result of a ‘we have no choice’ decision, or a well reasoned strategy for future growth? Digital map data, while important, is not the only element needed for success in the ‘location aware’ future. What are the missed opportunities from using so much capital to wrestle over map data?”

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