Over the past few weeks, the navigational world has had its fair share of takeover news. The two Dutch companies TomTom and Tele Atlas have agreed to merge and telecom-giant Nokia has convinced NAVTEQ with a generous offer to join them. And if that wasn’t enough, now there are rumours popping up of Microsoft being interested in… Garmin.The two confirmed takeovers have lead to a lot of speculation. When eg; the stock price of a Tele Atlas share was still 10% above the takeover offer of TomTom earlier this week, that shed a different light on the planned fusion. But by now, the Tele Atlas shares’ value have started to drop, which probably has put TomToms' financial experts a bit more at ease.
Thought
The two mentioned takeovers have made the other players on the navigational market think, no doubt. After NAVTEQ and Tele Atlas become part of Nokia and TomTom, there are no large, independent manufacturers of digital map material left any more! The Dutch company AND also produces digital maps, but few companies believe AND is a serious players on the market, since, compared to the two market leaders, this company is very limited in size, and its products are not on a par with the level of the competition yet. Of course, this whole reorientation of the market by NAVTEQ and Tele Atlas has made AND think, but on the other hand it’s also possible AND will be enrolled by a larger company, securing it’s future.Tight spot
Manufacturers of navigational systems and suppliers of mobile services are looking very closely at what TomTom and Nokia's next moves will be. Customers of NAVTEQ and Tele Atlas maps find themselves to be in an uncomfortable tight spot: will they be forced now to purchase their maps directly from the competition? And what about the sharing of secret company information?Mio was one of the first companies to indicate they weren’t particularly happy with Tele Atlas’ plans to become part of main competitor TomTom, because Mio shares sensitive company info with Tele Atlas, in order to enable them to create map material customised to Mio’s wishes. So it’s natural that all this is making Mio very nervous. After the statement of Mio’s CEO Notteboom that his company will probably switch to a different digital map supplier, there have been talks between MiTac, Mio’s mother company, TomTom and Tele Atlas. It seems now that all parties will be able to reach an agreement which is acceptable, and so existing relations and agreements will most likely remain to be honoured.
Position
Other parties who play a big role in the world of navigational systems and ‘location based services’ are Garmin and Microsoft. These two American giants are now also thinking about their position on the market, more in particular securing and enlarging it. No doubt
they’re also not very happy about not be able to purchase their maps from an independent source any more. That possibility definitely seems to be out of the picture now, even if there were rumours not so long ago about Garmin making an offer for Tele Atlas. That was some time ago though, and even though in theory such an offer can still be made, the rumours saying it will be are diminishing.Microsoft
More and more financial analysts are now considering the possibility that Garmin itself will be bought by another company, and Microsoft seems to be the number one candidate. This software giant is –just like Nokia- treading more and more onto the path of portable navigation and location based services. Considering the competition between Nokia and Microsoft, such a takeover would seem logical, not to mention that Garmin is a very interesting company to own.Garmin has managed to conquer a very large and solid part of the navigational market in its long history, and is booking terrific results. The company also hardly has any debts, which means security towards the future for any interested party. Add to that, that analysts believe Garmin could be sold for a very reasonable price. The correct stock price is $ 110, which is still a bit low compared to the market value of the company. The price of Garmin’s stock has increased tremendously in the past 4 months, but stock watchers claim there’s still room for more. After the news of the pending takeovers became public, Garmin's stock dropped 19% in three days. After the rumours about a possible takeover by or of Garmin, this loss has since been recuperated .
Enrichment
We can assume that Microsoft is really interested in taking over Garmin. Microsoft has more than enough money in the bank to pay for it, and by taking over Garmin, Microsoft will be able to add a lot of expertise and technology to their portfolio which could be a large step in conquering the navigational market. Garmin and Microsoft are no strangers to each other. Some of Garmin’s devices feature MSN direct by Microsoft with which dynamic content can be downloaded onto the unit.A possible merging of these two American companies will create a large party which can withstand the TomTom/Tele Atlas and Nokia/NAVTEQ combinations. Of course, when Garmin and Microsoft become one, there’s still one problem left unsolved: where to buy the digital map material? We cannot imagine either TomTom or Nokia making things easy on their competitor. There is a business relationship between Microsoft and NAVTEQ currently, but for how much longer this will stand is anyone’s guess. Since anything seems to go in the fast paced world of navigation and location based services, one may wonder if Microsoft and Google will also be able to change from competitors to business partners one day…
