Garmin takes on TomTom for Tele Atlas

Garmin Ltd. has announced its intention to make a public offer for all the outstanding shares of Tele Atlas N.V., beating TomTom’s earlier bid by nearly one billion dollars. Garmin’s indicative offer price of €24.50 in cash per share (on a fully diluted basis) implies an equity value for the company of $3.3 billion (€2.3 billion) and easily tops TomTom’s earlier offer to acquire the digital map maker for $2.5 billion.

ABI Research noted that the major players in the navigation and location industry are positioning themselves to take maximum advantage of the expected boom in connected personnel navigation devices, handset-based pedestrian navigation and other location-based services. Owning digital maps is considered critical to acquiring a dominant position in this market.

According to Mike Ippoliti, research director, telematics & automotive for ABI, the financial community would not be supportive of a possible bidding war between Garmin and TomTom, however. "The prospect of a bidding war for Tele Atlas is not something the stock markets will smile upon. If the markets felt Nokia paid too much for Navteq, they will surely feel the same way after the battle for Tele Atlas is concluded,” he said.

“Nokia did not pay too much, but it seems far more likely the winner of Tele Atlas will have overpaid,” Ippoliti continued. “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.”