Garmin shares fall on concerns over bidding war for Tele Atlas
By Purwa Khandelwal
Nov 1 (Reuters) - Shares of navigational device maker Garmin Ltd (GRMN.O) closed down 7 percent on concerns that it may have to pay too high a price for map maker Tele Atlas TA.AS, which has asked a rival bidder to match Garmin's offer.
On Wednesday, Garmin said it was willing to pay $3.3 billion
(2.1 billion euros) for Tele Atlas, a 15 percent premium to its Dutch rival TomTom's (TOM2.AS) offer.
On Thursday, Tele Atlas gave TomTom until Nov. 8 to raise its offer or the digital map maker said it would terminate their merger agreement.
Shares of Tele Atlas closed at 27.90 euros, which was above Garmin's bid of 24.50 euros, indicating that a bidding war could emerge.
The bids have raised concerns among investors, Marko Vucenovic, an analyst with FTN Midwest Securities, said by phone.
"Have they entered into a bidding war and what impact will that have on their financials going forward and will they pay too much?"
Garmin's bid for Tele Atlas was widely expected after its main map supplier, U.S.-based Navteq NVT.N, agreed to an $8.1 billion offer by cellphone maker Nokia (NOK1V.HE).
Whoever wins Tele Atlas is going to suffer a material dilution in their 2008 earnings, said David Niederman, an analyst with Pacific Crest.
"On the flip side, the company that does not win the war will be free of dilution, but will be in a weaker strategic position," he added.
Shares of Garmin, which has a market value of about $22 billion, fell as much as $9.76 to a low of $97.64 in intra-day trade on the Nasdaq, before pulling back some of the losses to close at $100.01.
((Reuters Messaging: purwa.khandelwal.reuters.com@reuters.net; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800)) Keywords: GARMIN SHARES/
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