Garmin Hits Trouble Spot
Garmin may end up with no choice but to pay a higher price after it was caught by surprise acquisition moves in the past few months involving the two key players in the mapping industry --- Navteq (NVT) and Tele Atlas.
TomTom got the ball rolling with its cash offer of 21.25 euros a share of Tele Atlas on July 23. The offer represented a 28% premium over the closing price of 16.55 euros a share on July 20, the last day before the bid for shares were made.
On Oct. 1, cell phone maker Nokia (NOK) surprised the industry with its $8.1 billion bid for Navteq -- a move that pushed Garmin tighter into a corner.
"Our consideration of an offer to acquire is really rather recent given the significant changes that have just recently taken place in the industry over the last 90 days," Kevin Rauckman, chief financial officer of Garmin acknowledged on a recent conference call, "and given those current moves toward consolidation in the sector we believe that now is the right time for us to combine with a mapping supplier."Garmin has also largely been using rival Navteq's mapping data, so a switch to Tele Atlas would cause considerable integration problems and bode a very bumpy ride ahead for the company.
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