Garmin bid for Tele Atlas trumps TomTom

By Niclas Mika

AMSTERDAM (Reuters) - Navigation device maker Garmin (GRMN.O: Quote, Profile, Research, Stock Buzz) made an unsolicited 2.3 billion-euro ($3.3 billion) offer for Dutch digital map provider Tele Atlas (TA.AS: Quote, Profile, Research, Stock Buzz) on Wednesday, trumping an agreed bid from TomTom (TOM2.AS: Quote, Profile, Research, Stock Buzz).

The move pits Garmin, U.S. market leader for navigation devices that guide drivers, against its top rival and European market leader TomTom.

A struggle to take the lead in the fast-growing industry had been widely expected after U.S.-based Navteq NVT.N, Tele Atlas's only global competitor, agreed this month to an $8.1 billion takeover by cellphone maker Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz).

TomTom had triggered the consolidation by offering to buy Tele Atlas in July, but Nokia's move -- at what was seen as a full price -- left Tele Atlas as the only likely target of a counterbid.

Garmin's offer is 24.50 euros for each share of Tele Atlas, 15 percent higher than TomTom's offer of 21.25 euros per share. Net of the cash on Tele Atlas' balance sheet, Garmin's offer is worth about 2.1 billion euros and TomTom's 1.8 billion.

Tele Atlas shares were up 15.8 percent at 27.80 euros by 1331 GMT in Amsterdam, well above Garmin's offer price, while TomTom shares slumped 18 percent to 55.60 euros. Garmin shares fell 8.8 percent on the Nasdaq to $109.86.

SNS Securities analysts said applying the multiples paid by Nokia -- roughly 9 times 2008 sales and 24 times 2008 core earnings -- yielded a price tag for Tele Atlas of between $2.3 billion and $3.3 billion, making Garmin's offer fair.

"But it is not about current and next year's earnings. It is about the map becoming a key differentiator in the navigation market going forward," SNS Securities said.