A new front has opened up in the GPS wars as TomTom (AMS: TOM2) and Garmin (NASDAQ: GRMN) are vying to relocate GPS data provider Tele Atlas (AMS: TA) within their company holdings. In July, TomTom announced a friendly buyout of Tele Atlas for slightly less than $30 a share, at that time a 32% premium. Last week, however, Garmin tossed its hat in the ring with a counter offer of $35.48. Tele Atlas gave TomTom five days to respond to the sweeter deal. TomTom has indeed responded with a revised offer of $43.44, or $4.2 billion, a whopping 81% premium on Tele Atlas' July stock price. The offer is even more noteworthy in light of Tele Atlas' lack of profitability. It is expected to lose another $7 million this year.
Tele Atlas is a provider of mapping information to TomTom, MapQuest and many other GPS systems, and is used in over 90% of U.S. 911 calls. The U.S. Dept. of Transportation uses Tele Atlas data, as do governments in many of the 64 nations for which it has compiled map data. Both Garmin and TomTom could benefit from integrating these geographic data products with their hardware business.
Tele Atlas shares continue to climb on the Amsterdam board, suggesting investors expect Garmin to respond to TomTom's latest offer.
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