Mio sales and marketing senior director Kiyoshi Hamai said Mio has no plans to switch to Navteq at present. “We’ve been assured by [TeleAtlas] that nothing is going to change.” He also noted that the industry is heading into a key selling season and that this would not be an ideal time to switch map suppliers.
Two PND makers that are TeleAtlas customers said they were contacted yesterday by Navteq.
Navteq issued a comment on the deal saying only, “We believe the announcement reinforces the value and importance of map data and location content.”
From Seeking Alpha:
[NAVTEQ] was backtracking Tuesday following a downgrade by Bear Stearns analyst Peter Barry, who cut his rating to Peer Perform from Outperform. [Barry quote]While we cannot ignore that scarcity value spawns or accelerates M&A interest in Navteq, any further premium valuation would be tough to justify based upon existing fundamentals, and would probably be meaningfully dilutive to any acquirer.
From Telematics Journal:
“For TomTom, it will be a huge cost advantage. Map data is the single largest cost element for navigation devices, and when the largest personal navigation device maker can save millions of dollars on licensing fees, it will have significant impact on the marketplace,” says Ippoliti [Michael Ippoliti, Research Director, Telematics & Automotive at ABI Research]. “TomTom can greatly reduce its costs, while also reducing PND competitors’ options, sending them into the arms of NAVTEQ, which gains de facto monopoly power unless TomTom creates a legitimately open business model.” ...
It is highly possible that the TeleAltas and TomTom combination may not pass regulatory approval. Despite the claims of due diligence and of creating an open business model, it will be much harder for TeleAltas to continue serving companies who directly compete with TomTom. TeleAltas could discount their map data, but at some point that becomes a money-loser for TomTom.
Word on the street is that TeleAtlas shareholders wanted a stock offer, not the all-cash deal TomTom has proposed. They wanted to share in the presumed growth in value for TomTom due to their acquisition. “So, could someone else swoop in and offer something to TeleAtlas which they can’t refuse? It would have to be a fair amount greater than the TomTom offer, because the deal has a 1% (20 Million Euro) break fee to TomTom, should the TeleAtlas board recommend anyone else’s offer. But at this level of play, 1% isn’t much,” explains Ippoliti.