Good news: Garmin realizes that bidding higher for TeleAtlas doesn't make the deal better

Global positioning system maker Garmin dropped its bid for map-maker TeleAtlas today, and the stock has rocketed up to over $100 a share again. Why? Because instead of paying $3.3 billion for TeleAtlas, Garmin simply signed a six-year extension with its current mapping provider, Navteq. That deal also has a four-year extension option.

Garmin's calculus was simple: it can build a lot of market and shareholder value with $3.3 billion over 10 years that doesn't involve owning a mapping company. And by 2017, there may be other mapping alternatives -- Google comes to mind -- that make a lot more business sense. Smart.

So what's the message here? Bidding more for a takeover doesn't make it a better deal, only a more expensive one. And when the bidding gets too rich, there's always another roadmap to success.

Full disclosure: the author has a long position in Garmin at the time of writing.

Technorati Tags: Garmin, Navteq, TeleAtlas