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July 23, 2007

TomTom Acquires Tele Atlas for $2.7 Billion. Google to Acquire NAVTEQ next?

TomTom announced today that it has agreed to acquire Tele Atlas, the second largest mapping data provider behind NAVTEQ, for $2.77 billion. TomTom will pay 21.25 euros per share (20% more than Tele Atlas' closing price on Friday).

With Google rumored to be looking at NAVTEQ with bedroom eyes, this may have just been a pre-emptive strike before Google owns every map in the world...

The purchase might make sense for TomTom, whose entire GPS line-up is powered by Tele Atlas mapping data. The increasingly competitive GPS market is yielding ever narrower margins for companies like Garmin, Magellan, and TomTom. Getting into the content game could make a significant difference to the bottom line.

TomTom says Tele Atlas' existing customer base needn't worry, as the mapping unit will continue to run as a separate business. Still, it does make you wonder if companies will be more inclined to jump ship and go to NAVTEQ, given that TomTom will now have a vested interest (and the power to use it) in keeping Tele Atlas' best data to themselves.