Leading navigation device maker in the United States, Garmin, announced on Wednesday 31 October that it had made an unsolicited $3.3 billion bid for Dutch digital map provider Tele Atlas, setting off a bidding war with its European rival TomTom.

At €24.50 ($35.40) a share in cash, Garmin''s offer for Tele Atlas is 15 per cent higher than TomTom''s $2.6 billion bid in July. It is offering a 48 per cent premium over Tele Atlas''s 20 July stock price, and wants Tele Atlas to tender at least 66.67 per cent of its shares.

Garmin has said it plans to officially launch the offer on 4 December, the date on which TomTom''s bid expires. But analysts believe that TomTom will come back with a higher offer, as acquiring Tele Atlas is in TomTom''s strategic interest, while for Garmin it''s more a defensive move.

Analysts feel Tele Atlas could end up fetching as much as €30 ($43.35) a share. A wave of consolidation is sweeping makers of digital maps for in-car or hand-held navigation devices. Some analysts have predicted that bidders like Microsoft or Google could also enter the fray.

Earlier this month the world''s largest maker of mobile phones Nokia Corp offered to buy Navteq, Tele Atlas''s larger competitor, for $8.1-billion. Navteq last month agreed to the takeover.

It''s a sign that Nokia plans come up with smart phones that, apart from e-mail and multimedia, have capabilities based on location information. The market for digital maps is dominated by a duopoly between Tele Atlas and Navteq Corp.

Based in the Netherlands, Tele Atlas maintains a database of digital maps of more than 200 countries, spanning all of North America and most of Europe, Russia, China, India and Pacific Asia. Garmin wants to integrate these maps in the company''s 25 million GPS devices, which help customers figure out where they are going or find addresses.

The market for navigation systems that guide travellers is soaring. Shipments of car navigation and global positioning systems are expected to triple worldwide by 2012 to 65.1 million units from 19.8 million in 2006.

Personal GPS-based navigation devices have taken over the car navigation market, that was once dominated by in-car systems. Both TomTom and Garmin have seen dramatic growth in the last four years. But TomTom''s rise has been the fastest, reaching nearly $1.6 billion in revenue last year from only $10 million in 2002.

But the fight over Tele Atlas has more to do with GPS manufacturers from Taiwan and Korea that want to grab a portion of the sales boom. The biggest threat comes from Mitac of Taiwan, which owns the Mio brand and recently bought Navman.

Mio and Navman together captured 20 per cent of the market last year, placing Mitac in the No: 3 spot behind TomTom and Garmin, which had 37 per cent and 25 per cent market shares respectively.

On the same day as its bid offer announcement, Garmin reported that revenue rose 79 per cent in the third quarter to $729 million from $408 million during the same period a year ago.

Revenue from its car navigation business was up 118 per cent at $519 million. Net income increased to $193.5 million or 88 cents a share, from $123 million, or 56 cents a share, a year ago. The company forecast revenue of more than $2.9 billion for the year, and earnings per share to exceed $3.40.

Apart from Garmin''s fabulous figures, most analysts said the offer was a good move. But investors still dumped the stock on the news. Garmin shares fell sharply on Wednesday, giving up almost 11 per cent to close at $107.40.