Garmin drops Tele Atlas bid, extends Navteq contract

Shares of Garmin Ltd. surged after the manufacturer of personal navigation devices withdrew its $3.3 billion takeover bid for digital mapping company Tele Atlas NV.
The move paves the way for TomTom, a Garmin rival that last week offered $4.25 billion for Tele Atlas . Tele Atlas in June had agreed to TomTom’s $2.8 billion offer , prompting Garmin to engage in a bidding war for the Dutch firm.
Garmin instead inked an extended pact with Navteq, a Tele Atlas rival, agreeing to remain a Navteq customer through 2015. Navteq is in the process of being acquired by Nokia Corp. for a whopping $8.1 billion.
Tele Atlas and Navteq provide digital mapping data that serve as the foundation for navigational applications and location-based services. The Navteq deal left Tele Atlas as the lone sizeable digital mapping player on the field.
Meanwhile, hardware companies Garmin and TomTom-which specialize in dedicated navigational devices-are increasingly threatened by mobile phones, many of which boast GPS functionality and colorful screens.
“Garmin has partnered with Navteq for many years. We utilize their map data in the majority of our products and we have always appreciated their commitment to the market,” said Garmin CEO Min Kao. “We believe the outcome creates the best value for Garmin, our customers and stakeholders.”
Investors seemed to believe Kao, sending shares of Garmin up $11.47, or nearly 14%, to $95.47 following the news.