October 31, 2007

Garmin Makes offer for TeleAtlas!

Garmin announced today that they are making an offer for TeleAtlas, which sets them up to go head to head versus TomTom for the map data provider. This is huge news, and starts a bidding war that will play out in the capital markets over the coming weeks and months. Nokia appears ready to sweep NAVTEQ off the table, and clearly the fate of TeleAtlas is now firmly in the hands of their board and their shareholders.

If Garmin were to get TeleAtlas, it would mean big changes. Garmin currently uses NAVTEQ maps, which if they were swapped out, would significantly lower the value of NAVTEQ. It would then put TomTom and others at a significant disadvantage since they currently use TeleAtlas. TomTom would then absolutely NOT share map change data gathered with their MapShare program back with TeleAtlas, and as a result Garmin.

More on the press release below…. Also see the Garmin Website for a lot of legal mumbo jumbo and more information about the offer.

Garmin announced today that it notified the supervisory and managing boards (collectively the “Boards”) of Tele Atlas N.V. (“Tele Atlas” or “the Company”) today of its intention to make a public offer for all the outstanding shares of Tele Atlas N.V. on a fully diluted basis at an indicative offer price of €24.50 in cash per share (the “Offer”), implying an equity value for the Company of €2.3 billion. The intended Offer will be subject to customary conditions, such as receipt of the requisite antitrust approvals and tender of at least 66.67% of the issued share capital. In addition to its cash balance in excess of $1 billion, Garmin has secured financing commitments sufficient for the intended Offer. Garmin plans to launch the offer before December 4, 2007 (the scheduled expiry date of TomTom's offer).

Garmin believes that a combination of Garmin and Tele Atlas provides the best value for all stakeholders for the following reasons:

  • Garmin’s intended offer is a materially higher cash value for Tele Atlas’ shareholders than the offer made by TomTom, 15% higher than the offer by TomTom and a 48% premium to the undisturbed Tele Atlas share price on July 20, 2007
  • A combined company will allow Tele Atlas’ employees and customers to leverage Garmin’s large worldwide user base and industry leading technology to further contribute to the creation of superior mapping coverage, quality and shared content for all of Tele Atlas’ current and future customers
  • Garmin's broad international footprint, global market share and strong balance sheet will promote the growth ambitions and prospects of Tele Atlas and its employees
  • In addition to the benefits associated with the portable navigation market, a combined company will expand Garmin’s ability to serve more customers in wireless, in-dash automotive, internet, and enterprise markets by offering a broad range of solutions including content, applications, and devices.

    Commenting on the announcement, Garmin CEO Dr. Min Kao said: “Given the high growth and rapid change the navigation market has undergone to date, we feel that now is the right time for Garmin to move ahead with this proposed combination with Tele Atlas. Together, we believe that we can create the best available mapping solutions for our customers around the world. We also intend to make Tele Atlas' content available to the entire navigation market on a non-discriminatory basis, promoting healthy competition, with significant benefits to the navigation market and all its consumers.”

    It is Garmin’s intention that Tele Atlas, following the completion of the strategic combination with Garmin, will continue its business as a separate entity, based and headquartered in the Netherlands. Garmin wishes to retain the existing management

    team and all of the Tele Atlas employees and would welcome them into its global family of nearly 8,000 employees. It also strongly believes that the increased scale of operations of the proposed combination will offer exciting and enhanced career opportunities to Tele Atlas’ employees and will create additional jobs in the Netherlands.

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    Posted by Scott Martin at October 31, 2007 7:59 AM
  • Recent Comments

    I see too much of Garmin's energies being tied up in legal battles to bring this deal to fruition. I am uncertain GPS companies currently utilizing TeleAtlas are going to let their fortunes ride on the good will of the market's 800lb gorilla.

    Posted by: Rob at October 31, 2007 8:38 PM

    Garmin has a couple of problems here:

    1) As a company whose assets/income are denominated mostly in US Dollars, the effect of the trending long term decline of the Dollar vs. the Euro will make it much more expensive for Garmin than for TomTom, especially if this takes a few months to resolve. Even though both companies are rolling in cash, TomTom's cash is more valuable, and becomes more so by the day.

    2) The European Commission may step in and delay or stop Garmin's bid. Even though there is no plausible monopoly argument here, the EC has shown a tendency to favor European companies over American ones where there is any strategic competitive concern. TeleAtlas may be considered a European asset and better in the hands of a company like TomTom than an American one (Garmin) or Asian (Mio, others).

    I think on balance TomTom's play for TeleAtlas was a good move for them, but I also think that Microsoft and Google made strategic errors in not acquiring NavTeq while they had the chance, as I believe the obstacles to building the capacity for this type of intellectual property are formidable, particularly given that both Microsoft's and Google's business strategies depend to a significant degree on leveraging mapping resources.

    Posted by: John at October 31, 2007 11:32 AM
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