Digital-map company Tele Atlas has given navigation device maker TomTom five days to raise its agreed bid for the company, a day after receiving a higher bid from TomTom rival Garmin.
Garmin offered 24.5 euros ($36.74) for each Tele Atlas share on Wednesday, 15 percent higher than TomTom's offer, setting the stage for a bidding war.
Tele Atlas said the Garmin offer, worth 2.1 billion euros ($3 billion) net of cash on Tele Atlas's balance sheet, was superior to TomTom's 1.8 billion euro ($2.59 billion) bid, and activated a five-day period ending November 8, during which TomTom can match Garmin's offer.
"If TomTom chooses not to match that superior proposal within the five business day period, Tele Atlas intends to terminate the TomTom agreement," Tele Atlas said.
Taco Titulaer, spokesman at Amsterdam-based TomTom, said the company was aware of Tele Atlas's statement but did not comment on any plans to counter Garmin's higher bid.
Tele Atlas shares climbed 4.8 percent to a record 28.9 euros ($41.63), making a 25.6 percent rise this week. TomTom shares were up slightly at 55.3 euros ($79.66), still 13.5 percent lower this week.
European market leader TomTom is Garmin's top rival in the market for navigation devices that guide drivers. A struggle to take the lead in the fast-growing industry had been widely expected after United States-based Navteq, Tele Atlas's only global competitor, agreed this month to an $8.1 billion takeover by cell phone maker Nokia.
ING said TomTom could counterbid up to 30 euros ($43.22) per share for Tele Atlas, but "Garmin is likely to outbid TomTom, as it seems very determined to own Tele Atlas".
Rabo Securities also said it was likely that TomTom would top Garmin's offer and that a bidding war was inevitable.
Tele Atlas said earlier on Thursday that it had bought a controlling stake in South African data company Georigin, which specializes in data collection for west, east, and southern Africa, and has headquarters in Pretoria.
"The acquisition gives Tele Atlas control of a company in a region with potential, even if it is more in the medium to long term," SNS Securities said in a note.
Tele Atlas also said it was expanding its Asia-Pacific operations by setting up a joint venture with MappointAsia Thailand, aiming to deliver digital-map data for the region.
It is also rolling out a new mapping van in Singapore, its second vehicle in the Asia-Pacific region. The mapping vans capture information about a road, including lane counts and speed limits, which it can use to update its maps.
