Don’t you love the drama? Less than a month after Tom Tom finalized a $2.5B bid for Tele Atlas, Garmin trumps with a $3.3B offer. This puts the Tele Atlas board in a very uncomfortable position. The strategic fit with Tom Tom is much stronger - both companies are based in the Netherlands and most of Tom Tom’s devices use TA data. But the board has a fiduciary responsibility to TA shareholders and would have no choice but to accept the new offer, if the bid is indeed apples to apples. On the other side of the table, Garmin almost exclusively uses Navteq data. I’m not sure how deeply integrated the data is, but it won’t be a trivial process to change horses. And here’s the kicker - Garmin won’t make the offer official until December 4th, the same say the Tom Tom bid expires.
How’s this for a possible soap opera: Tom Tom loses Tele Atlas and switches to Navteq for licensing data. Garmin gets TA, overpays and has a nice goodwill write-off in a few years. Nokia ends up the winner, despite a mammoth $8.1B price for Navteq, since mobile LBS is the future. Meanwhile, Google launches an open source mapping program that makes all of this consolidation seem laughable in hindsight. It could happen…
I came across an interesting tidbit from an interview with Tele Atlas CEO Alain De Taeye. TomTom and Tele Atlas want to tap into the user-generated content phenomenon that’s fueling the Web 2.0 trend. The two want to create a community that provides feedback on roads, traffic and points of interest, says De Taeye.
“We are going into a new era of digital mapping,” De Taeye said in the interview. “The best map of the future will be a map that is produced by a company that has full access to a large community-based input system.” With its big installed base of users, TomTom can get feedback to enhance and correct its maps, he said. Tele Atlas executives say many users want to create map databases. “That’s a huge opportunity,” De Taeye said.
So does this mean the end to all those orange Tele Atlas vans mapping the world’s roads? Probably. Do you think TomTom and Tele Atlas will give users a discount on GPS units for creating and maintaining this valuable data? Probably not. What do you think this means for the future of map data collection?
Personal navigation device (PND) maker TomTom made an announcement this morning about plans to acquire Tele Atlas, the #2 provider of digital map data. TomTom said it would pay 21.25 euros ($29.33) per share for the Netherlands-based Tele Atlas. The offer was a 28 percent premium to Tele Atlas’ closing price on Friday. TomTom is the world’s leading PND manufacturer, with market share in Europe of just under 50 percent and around 20 percent in the United States.
Tele Atlas has deals to provide map data to TomTom, Qualcomm and Nokia, while Garmin, Google, Yahoo and AOL’s MapQuest use mostly Navteq. But the bigger companies use at least some information from both, and analysts say they have an interest in ensuring neither Navteq nor Tele Atlas becomes too dominant at geo-mapping information.
This show isn’t over yet - some analysts commented that TomTom’s offer is low and that a counteroffer could come from someone like Google. Navteq, the leading provider of map data, is considered an unlikely bidder for anti-competitive reasons. Tele Atlas management supports the deal and is talking to shareholders, but a tiny breakup fee of €20 million ($27.6M) could make them change their tune if something better comes along.
Don’t you love the drama? Less than a month after Tom Tom finalized a $2.5B bid for Tele Atlas, Garmin trumps with a $3.3B offer. This puts the Tele Atlas board in a very uncomfortable position. The strategic fit with Tom Tom is much stronger - both companies are based in the Netherlands and most of Tom Tom’s devices use TA data. But the board has a fiduciary responsibility to TA shareholders and would have no choice but to accept the new offer, if the bid is indeed apples to apples. On the other side of the table, Garmin almost exclusively uses Navteq data. I’m not sure how deeply integrated the data is, but it won’t be a trivial process to change horses. And here’s the kicker - Garmin won’t make the offer official until December 4th, the same say the Tom Tom bid expires.
How’s this for a possible soap opera: Tom Tom loses Tele Atlas and switches to Navteq for licensing data. Garmin gets TA, overpays and has a nice goodwill write-off in a few years. Nokia ends up the winner, despite a mammoth $8.1B price for Navteq, since mobile LBS is the future. Meanwhile, Google launches an open source mapping program that makes all of this consolidation seem laughable in hindsight. It could happen…
