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November 7, 2007 9:47 am

Tom Tom raises bid for Tele Atlas

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TomTom, the world's biggest maker of navigation devices, raised its offer for TeleAtlas, the mapping company, by 41 per cent on Wednesday and bought 28 per cent of the target’s shares in a bid to see off a challenge from US rival Garmin.

Garmin sparked a bidding war for Tele Atlas last week with an unsolicited €2.1bn bid that trumped TomTom's initial offer. The Dutch company raised its cash offer for TeleAtlas to €30 a share, valuing TomTom at about €2.9bn.

"We are now well positioned to buy Tele Atlas," Harold Goddijn, chief executive, told the Financial Times. "We are now their biggest customer and their biggest shareholder."

The bidding war for Tele Atlas comes at a time of consolidation in the digital mapping industry. Tele Atlas, like TomTom based in the Netherlands, is one of only two large global providers of digital maps. Navteq, its competitor, was bought by Nokia for $8.1bn in September.

Tele Atlas shares rose 18 per cent to €31.80, above the offer price, signalling investors believed Garmin may raise its offer. TomTom shares fell 1 per cent to €56.

Garmin and TomTom both want to own a mapping company to keep down the cost of maps and develop new products. Sales of navigation devices are set to double this year from 16m in 2006.

"The whole navigation and mapping industry is still relatively young." Mr Goddijn said. "This is not the endgame but I think it's an important transition phase in the industry."

By buying Tele Atlas, TomTom, best known for the small gadgets owners stick to carwindscreens, could expand in the "content" business by providing mapping and navigation software for mobile phones and wireless devices, Mr Goddijn said.

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