This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Garmin Hits Trouble Spot

"TomTom could see its proposed combination with Tele Atlas as a matter of life or death and will gradually raise its bid as high as its cash flow and capitalization will allow," Reiner said in a recent note to clients.

There's little doubt that TomTom will come back with a new bid -- something even Garmin has acknowledged in its recent conference call with analysts.

Shares of Tele Atlas were trading at $40.29 Monday, suggesting investors expect a higher counteroffer from TomTom.

That would force Garmin to raise its offer up to $59.32 a share. Reiner assigns a 40% probability to this scenario. CIBC makes a market in Garmin shares.

The possibility of such a bidding war has hurt Garmin's shares since its bid was announced. The stock was off another 4% on Monday to $94.32.

Given the health of its balance sheet, Garmin could effortlessly bid higher than TomTom, says Scott Sutherland, managing director and Garmin analyst at Wedbush Morgan.

"But it's more complex than the price," says Sutherland. "There are a lot of variables such as how dilutive the acquisition is and how easily Garmin can move its stuff over to Tele Atlas." Wedbush Morgan does not own shares or have an investment banking relationship with Garmin.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
GRMN $45.22 -0.14%
NOK $6.46 1.30%
TSLA $230.78 -0.93%
YHOO $41.46 0.39%
AAPL $125.19 -0.48%


DOW 17,887.49 -40.71 -0.23%
S&P 500 2,083.84 -5.62 -0.27%
NASDAQ 4,925.5940 -13.7330 -0.28%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs