Garmin, the world’s top GPS producer, dropped its $3.3 billion bid for mapmaker Tele Atlas yesterday, allowing rival TomTom to seal the deal. That may prove a long-term disadvantage for Garmin, but investors love the non-deal, sending shares up 16%, their best gain in five years. “There’s relief,” one analyst said. “The bidding had gone to a level that people didn’t like.”
The GPS market is fast consolidating, with Nokia recently acquiring Navteq, the only other global mapper. After turning down Tele Atlas, Garmin inked a multi-ear deal to license maps from Navteq, but they may someday regret relying on competitors for maps. “The strategic disadvantage…will continue as an overhang,” an analyst told Bloomberg. TomTom, meanwhile, is positioned to license maps out, providing more revenue.