By now most of us recognize TomTom as the leading provider of navigational GPS units for automobiles. The company is looking to build on their technology by claiming a significant role in the ‘Tele-Atlas Take Over’.
TomTom recently increased the bid to $4.2 billion in cash to claim stake in Tele-Atlas. Tele-Atlas is the prominent digital supplier that has designed maps for reputable PND creators such as the Dash, Mio, Navigon and the Cobra.
TomTom reported that they would instantly buy out and acquire 25.8 million of the Tele-Atlas shares; this makes up an estimated 28% of the company’s total share capital. The owner of TomTom is confident in the positive effects this merger will have on their current line of GPS devices. He believes this will enable them to make navigational systems for automobiles more available than ever before.
The industry views TomTom’s bold business move as a crucial blow to its primary competitor, Garmin. Garmin, another producer of GPS systems, recently made an initial bid of a whopping 3.376 billion dollars. This wage was blown clear out of the water once TomTom increased the stakes. When the smoke cleared the victor was the GPS provider with the largest bank account.
CAUSE OF WAR
Tele Atlas is now being heavily pursued because it is essentially the only map provider left on the market. The company Navteq, was recently priced out with an 8.1 billion dollar bid from Nokia. Navteq was the only worthy rival of Tele-Atlas in the way of map providers. The move by Nokia left Tele Atlas as open game for those interested in making the merger, with TomTom and Garmin being the most capable.
INITIAL REACTIONS
TomTom first expressed its intrigue in Tele-Atlas in July of 2007. A huge move such as this was one bound to give them a considerable advantage in the GPS industry. By purchasing their PND supplies for a low end cost, the availability and quality of their product would be unrivaled.
It’s been said that the initial reaction by TomTom put a bit of pressure on the Garmin company, the number one provider of GPS systems for cars in the United States. With TomTom getting their products at a discounted rate, the price for Garmin would remain the same while putting them at an inevitable disadvantage in the long run.
From the start the Tele-Atlas company seemed to favor negotiations with TomTom in which they expected to have a deal in writing by the end of the year. This is highly likely to be the result of TomTom’s growing popularity in the United States.
In order for both companies to succeed, TomTom and Garmin both rely on digital mapping suppliers. This enables them to reach markets far and beyond GPS systems. The Tele-Atlas Take Over is a tremendous issue in this industry. The winner of this high stakes buyout is viewed as the likely ruler of the overall GPS market. As is it stands now, TomTom seems to be the chosen ‘ONE’.
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