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TomTom says Tele Atlas merger held up by EU investigation
- — 07 April, 2008 15:30
TomTom's acquisition of mapping company Tele Atlas has dragged on longer than expected, held up by an investigation by the European Union's antitrust authority, which must approve the merger. TomTom has extended its offer for another two months.
The European Commission announced in late November that it would examine whether TomTom acquiring Tele Atlas would have an adverse effect on competition in the market for GPS navigation devices, saying it expected to complete its investigation by April 17.
However, on Thursday TomTom said it now expected that investigation would not be complete until May 21, and announced it would extend its offer for Tele Atlas until May 30.
Despite the delay, TomTom and Tele Atlas said they remain confident that the Commission will approve the deal.
TomTom initially offered Euro 2 billion (US$3.2 billion) for Tele Atlas in July, raising its offer to Euro 2.9 billion in November after a rival bid of Euro 2.3 billion from navigation device maker Garmin. Meanwhile, Tele Atlas's main rival in the mapping business, NavTeq, had been snapped up for US$8.1 billion by Nokia, which is increasingly incorporating GPS receivers into its mobile phones.
Although TomTom and Tele Atlas are in different markets — TomTom makes navigation devices and Tele Atlas supplies mapping data — many of TomTom's competitors rely on information from Tele Atlas, which has few competitors. The Commission expressed concern that the price of navigation devices could rise if TomTom were to control the price its competitors paid for mapping data.
Upon receiving word of the timetable for the Commission's inquiry, TomTom extended its tender offer for Tele Atlas's shares until March 31, assuming the investigation would be completed by then.
As the deadline approached with no end to the investigation in sight, though, TomTom was forced to extend its tender offer. TomTom said it may extend the offer again if the Commission has still not reached a decision by May 30.