TomTom turned up the heat in its bidding war with Garmin over Tele Atlas, raising its bid by more than $1 billion, to $4.3 billion, but analysts say Garmin will likely come back with a counteroffer.
The race to own Tele Atlas has taken on new urgency since the only other GPS map maker, Navteq, accepted Nokia's purchase offer in October of $8.1 billion.
Whoever wins the bid for Tele Atlas will benefit from lower-cost maps and map innovations at a time when the GPS market is growing fiercely competitive.
Analyst Peter Friedland of Soleil Equity Research said he expects "Garmin to come back with a higher bid."
A spokesman for Garmin said, "We're reviewing the current offer on the table and our options, but at this point, we don't have anything specific to report."
Analyst Rob Sanderson of American Techology Research said Garmin has the resources to outbid TomTom. Garmin could bid up to 44 euros per share while TomTom could bid up to 42.5 euros per share, each without diluting earnings in 2010, he said. TomTom's current bid is for 30 euros per share.
TomTom also said this month it will acquire 25.8 million shares of Tele Atlas, representing a 28.3 percent stake in the company. Garmin owns 5 percent of Tele Atlas shares.
The bidding for Tele Atlas began in July when TomTom announced it intended to purchase Tele Atlas for 2 billion euros, followed by Nokia's announced plans to purchase Navteq.
The moves forced Garmin to place a counterbid for Tele Atlas in order to continue "to provide market leadership" said Garmin chairman and CEO Dr. Min Kao on Oct. 31, the day he announced Garmin's $3.3 billion counter offer for Tele Atlas.
"The winner of Tele Atlas will be in a much stronger strategic position than the loser," said Sanderson.
All eyes are now on Garmin.