U.S. navigational device maker Garmin said Friday it dropped its pursuit of digital map maker Tele Atlas, after Dutch rival bidder TomTom raised its offer.
Tele Atlas shares tumbled 9 percent on the news, while Garmin's shares jumped 20 percent as its withdrawal eased Wall Street concerns of a costly bidding war with TomTom.
Shares of TomTom rose 9 percent as Garmin's move cleared the way for the Dutch navigational device maker to control one of just two global digital map makers and reduce its dependence on selling hardware.
Garmin also said it has signed a six-year extension to its agreement to use map data from Navteq Corp, the only other digital map maker, which has agreed to be acquired by Nokia.
Garmin offered 24.50 euros per share for Tele Atlas, or a total of 2.3 billion euros ($3.4 billion) in late October. But it was trumped by TomTom, which raised its bid earlier this month to 30 euros per share, or 2.9 billion euros ($4.2 billion) in total, from a July offer of 21.25 euros a share.
TomTom also bought a 28 percent stake in Tele Atlas, a move that analysts said made it tough for Garmin to pursue the map maker though many had still expected the U.S. company to make a counter bid.
Garmin will continue to use Navteq maps through 2015, with an option to renew for another four years. The two sides plan to expand their cooperation to improve mapping quality and coverage worldwide.
They did not disclose the financial terms of their agreement.
"Extending our agreement with Navteq ensures the availability of quality mapping data for our customers, and provides a basis for enhanced cooperation," Garmin Chief Executive Min Kao said in a statement.
Garmin said "in light of these developments it does not intend to pursue its offer for Tele Atlas."
Shares of Garmin rose to $100.65 in premarket trading from their Thursday Nasdaq close of $84.0. Tele Atlas shares were down 8.63 percent at 29.33 euros and TomTom were up 8.76 percent at 61.72 euros.