Garmin wird vorbörslich gleichfalls zerlegt -- ggf. Chance für Einsteig
GRMN Garmin Ltd 113.00 -7.48 -6.21%
8:23
ROUNDUP Bidding war looms as Garmin offer for Tele Atlas outguns TomTom -
ROUNDUP Bidding war looms as Garmin offer for Tele Atlas outguns TomTom
October 31, 2007: 08:23 AM EST
AMSTERDAM, Oct. 31, 2007 (Thomson Financial delivered by Newstex) -- Garmin Ltd (NASDAQ:GRMN) has fired the first salvo in a possible bidding war as it announced an indicative 24.5 eur per share cash offer for all of Tele Atlas NV's outstanding shares, outgunning an earlier offer from its Dutch rival TomTom NV.
Garmin said its offer implies an 2.3 bln eur equity value of Tele Atlas, topping the existing 21.25 eur per share bid by TomTom, which valued the company at 2 bln.
Tele Atlas said in July when TomTom announced its bid that it would recommend the offer to shareholders, but is now reviewing the terms of Garmin's offer, promising to inform the market as soon as possible.
Garmin's vice president of communications, Jon Cassat, said Garmin intends to lodge regulatory filings with Dutch authorities this week and to launch the offer shortly after, before the close of TomTom's tender offer on Dec 4.
'We believe this is a compelling story and we're excited about moving forward,' Cassat said in a conference call with journalists.
Garmin said it wants to meet with the Tele Atlas executives within the next week, adding that that he is 'confident' that a meeting will take place within a 'matter of days'.
Garmin also said it will seek the approval of the Tele Atlas' board, but added that approval is not a condition of its offer.
Brokerage SNS Securities said in reaction that this signals Garmin's willingness to move forward even if the bid becomes hostile.
The US personal navigation device maker said the offer is subject to antitrust approvals and minimum acceptances of at least 66.67 pct of the issued share capital of Tele Atlas.
In addition to a cash balance in excess of 1 bln usd, Garmin said it has secured financing commitments sufficient for the offer.
TomTom said it is reviewing the news of Garmin's offer, but declined to comment further.
However, analysts agreed that a bidding war looms, with Petercam suggesting that 30 eur would be a 'knockout price'.
Petercam analyst Eric de Graaf added that the only logical conclusion is that TomTom takes the next step and significantly raises its bid, suggesting that it should offer at least 27 eur, which is 10 pct above the Garmin bid.
'TomTom started this and now it has to finish it,' De Graaf said.
But De Graaf added in a note to clients that the Garmin offer 'highlights the strategic error' TomTom made by not buying shares below the bid price before the official bid started.
TomTom's share price plunged following the news of Garmin's offer and was 16.39 pct lower at 56.67 eur at 12.53 pm, while Garmin shares slid 6.5 pct at 112.70 usd in premarket trading in New York.
Conversely, shares in Tele Atlas surged 16.66 pct at 28.01 eur with SNS Securities suggesting in a note to clients that 'the bidding war has just started'.
Although Garmin currently only uses Tele Atlas maps in Malaysia, Singapore and Indonesia, SNS said the strategic importance of the digital map is such that Garmin is willing to enter into a bidding war with TomTom.
SNS said the intended offer from Garmin fully values Tele Atlas using the multiples of Nokia's (NYSE:NOK) bid on Tele Atlas rival Navteq Corp. (NYSE:NVT)
'However, 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, enabling the introduction of all sorts of auxiliary services,' SNS said.
Garmin plans to maintain Tele Atlas as a separate unit, based in the Netherlands, and wants to retain existing management team and all staff.
If the bid succeeds, Garmin will provide Tele Atlas's pear map data to all Tele Atlas clients 'without discrimination', as TomTom also promised to do when it announced its offer for Tele Atlas in July.
But Petercam said it believes TomTom has more to gain from the acquisition than Garmin, as it has specific plans to work together on traffic updates and higher refresh rates.
'We think that TomTom cannot afford not to acquire Tele Atlas,' Petercam said.
Aaron Gray-Block; aaron.gray-block@thomson.com
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