Tele Atlas endorses €2.9 billion TomTom Bid

Many
people thought that navigation device provider Garmin would be in
trouble earlier this year after its main rival TomTom agreed to buy
mapping service Tele Atlas and Nokia agreed to buy TeleAtlas' only real
rival Navteq. Potentially, that could have left Garmin without a
mapping partner, though it seem difficult to believe that Nokia would
cut off Garmin. However, Garmin tried to outbid TomTom for Tele Atlas
while also buying up 5% of Tele Atlas' shares on the open market,
leading TomTom to significantly increase its own bid, from the original
$2.5 billion offer all the way up to $4.2 billion. People were waiting
to see if Garmin would go even higher, but instead, it pulled a nice
switcheroo. First, it worked out a settlement with TomTom on various
patent lawsuits the two were fighting, and then went in for the kill.
Garmin signed a long term deal with Navteq, guaranteeing access to its
maps for the next 10 years (6 years, with a 4 year option afterwards)
and then dropping its bid for Tele Atlas. In other words, Garmin
doesn't have to worry about being shut out from mapping services for 10
years (at which point other options may be available), it doesn't have
to pay $3.3 billion to buy Tele Atlas, it forced its main competitor
TomTom to spend $1.7 billion more than it wanted to. And, oh yeah,
it'll make back a bunch of money when TomTom takes over Tele Atlas,
because that 5% stake that Garmin had acquired will get sold at a nice
premium in the acquisition.

Tele Atlas NV said it would endorse a €2.9 billion (US$4.2 billion) takeover offer from personal device maker TomTom NV, which is engaged in a bidding war over the digital mapmaker with larger rival Garmin PLC.

[...]

The TomTom bid "is more favorable to Tele Atlas, its shareholders and other stakeholders," Tele Atlas said in a statement.

That offer is for €30 (US$43.90) per share, compared to Garmin's €24.50 (US$35.85) per share offer. Tele Atlas shares are trading at €31.75 (US$46.46), suggesting some investors believe Garmin will now rebid.

TomTom began the bidding for Tele Atlas in July, only to see Garmin respond last week.

The use of digital maps is booming, and the apparent worth of Tele Atlas increased sharply last month when Nokia Corp. announced a US$8.1 billion (€5.7 billion) takeover bid for Navteq Corp. — the only digital mapping company other than Tele Atlas with global operations.