Sector set for consolidation and convergence.
Further illustrating my point that the GPS sector is set for consolidation and convergence (as standalone products get absorbed by multifunctional mobile devices) TomTom has now confirmed it has made a formalised offer for mapping software developer Tele Atlas.
The bid is valued at €21.25 per share which totals at roughly €1.8bn and comes three months after TomTom signalled its intent to make an offer of this exact amount. Of course whether Tele Atlas will accept is another matter – the deal represented a 32 per cent premium over its trading value back in July but Nokia’s agreement for Navteq has already pushed values in GPS companies right up.
Any deal would also likely exclude Tele Atlas from trading with TomTom rivals (surely half TomTom’s point) and it already has bountiful agreements in place a number of Sat Nav companies, including TomTom. Tele Atlas has also recently begun shipping 3D Landmark and landscape enabled maps (above), a stunning differentiator at present (and its exclusivity may likely be the other half of TomTom’s motivation).
The bigger question however is will TomTom (with or without Tele Atlas) become a takeover target itself for an even larger fish? Don’t bet against it. The future of GPS is in integration people…