Garmin drops out of bidding war for Tele Atlas

Garmin has pulled out of a bidding war to buy digital maps company Tele Atlas, and instead extended its contract with rival maps company Navteq.

GPS products maker Garmin has pulled out of its bidding war to buy digital maps company Tele Atlas, and instead extended its contract with rival maps company Navteq.

Garmin's announcement Friday comes at a time of rapid consolidation in the market for digital mapping services, which are licensed by online companies such as Google and Mapquest, but are also vital to companies that make GPS (Global Positioning System) navigation equipment.

Garmin had been battling for Tele Atlas with GPS products maker TomTom International. TomTom made the first bid of about $Euro2 billion (US$2.9 billion) in July, and Garmin countered with an offer of a $Euro2.3 billion late last month. TomTom shot back last week with an all cash offer of $Euro2.9 billion, which now appears to have sealed the deal.

Garmin said Thursday that its subsidiaries, Garmin International and Garmin Corp., have signed a six-year extension to their digital maps contract with Navteq, allowing them to continue using its data until 2015. They also have an option to extend the deal for a further four years.

In light of that development, Garmin said, it will stop pursuing the deal to buy Tele Atlas.

Navteq has also announced plans to be acquired by Nokia Corp. for US$8.1 billion. The Finnish handset maker has said it will continue to license Navteq's digital maps on a stand-alone basis, allowing Garmin to keep using the service even after Nokia acquires it.

The outcome of all the dealings could be significant for consumers, who are being offered location-based services in a wider range of products, including new cell phones and other portable gadgets.

GPS makers say that by owning the mapping service companies they can offer more up-to-date maps to their customers. Today the digital maps that appear in GPS systems can be six months out of date.

Nokia's purchase of Navteq should allow it to offer GPS service in a wider range of its phones, including lower-priced models.

Separately, Garmin and TomTom said they had settled all of the outstanding intellectual property lawsuits between the companies, including cases in the U.K., the Netherlands and the U.S. Financial terms of the settlement weren't disclosed.

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