Garmin Abandons Tele Atlas Bid
By Amy Gilroy -- TWICE, 11/16/2007
Olathe, Kan. — Garmin abandoned its bid to purchase Tele Atlas for $3.3 billion, leaving TomTom the leading bidder for the only remaining independent GPS map maker.
In addition, Garmin announced it reached a new long-term agreement with Tele Atlas rival Navteq to provide Garmin maps through 2015, with an option to continue through 2019.
A spokesman for Garmin said, “With the new long term agreement with Navteq, we decided not to pursue the offer.”
TomTom had no comment on Garmin’s action.
While Garmin would be better off owning a map supplier, Peter Friedland of Soliel Equity Research said, “We do believe this is a positive outcome, as the long-term deal with Navteq effectively takes ‘the map question’ off the table for the foreseeable future, and provides Garmin with a significant amount of time to consider other alternatives like potentially developing an internal map database, either alone or in partnership.”
He also noted that Garmin’s bid for Tele Atlas successfully upped the price its rival TomTom must pay for Tele Atlas by $1 billion.
The bidding for Tele Atlas began in July when TomTom announced it intended to purchase Tele Atlas for 2 billion euros, and Nokia responded by announcing plans to purchase the only other global GPS map maker Navteq for $8.1 billion.
Garmin responded with a counter bid for Tele Atlas on Oct. 31, which was followed by a new TomTom bid of $4.3 billion on November 7.
Tele Atlas has recommended its shareholders accept the latest TomTom bid.
Both TomTom and Nokia said that Tele Atlas and Navteq will continue to sell to other makers of GPS devices.
Magellan VP and GM for consumer products Christain Bubenheim said of the shift in map ownership, “I think nothing will change in the short term … There’s still two players out there [Tele Atlas and Navteq] and they will vie for business. The pressure is still on. And maps will continue to go down in price.”
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