Garmin Bids for Tele Atlas

Updated from 7:38 a.m. EDT

Navigation devices maker Garmin(GRMN Quote) stunned investors Wednesday with an unsolicited 2.3 billion euro ($3.3 billion) bid for Dutch mapping company Tele Atlas, trumping a three-month old offer from rival TomTom.

News of the hostile bid and the prospects of a bidding war sent shares of Garmin sliding $9.73, or 8%, to $110.75 in recent trading and overshadowed the company's strong third-quarter results.

Garmin said it will offer $35.31 for a share of Tele Atlas, 15% higher than the $30.63 TomTom offered in July and a 48% premium to Tele Atlas' share price before TomTom's bid.

Garmin said it expects a counter-bid from its Netherlands-based rival TomTom.

Reik Read, an analyst with Robert W. Baird, took a dim view of the bid because of the possibility of a "bidding war as TomTom and Garmin have similar purchasing capability.

"And assuming Garmin wins, this is a difficult integration of a software mapping company, which is dissimilar to a hardware company [such as Garmin] in business model and culture," said Read. Robert Baird makes a market in Garmin shares and has an investment banking relationship with Garmin.

Garmin's aggressive move comes nearly a month after cellphone maker Nokia(NOK Quote) offered to buy digital mapmaker Navteq(NVT Quote) for $8.1 billion. Nokia's acquisition is expected to close in the first quarter of fiscal 2008.