Oct. 31 (Bloomberg) -- Garmin Ltd., the biggest U.S. manufacturer of car navigation devices, will make a hostile 2.3 billion-euro ($3.3 billion) cash offer for Tele Atlas NV, topping a bid by TomTom NV for the digital-mapping company.

The battle for Tele Atlas, the world's second-largest maker of digital maps, comes as global retail sales of navigation products are estimated to rise 20 percent to $10 billion this year. Honda Motor Co. installs Garmin equipment in its Civic and Accord models and Nokia Oyj agreed to buy Navteq Corp. for $8.1 billion this month to add map content to its mobile phones.

Garmin, based in George Town, Grand Cayman, will offer 24.50 euros for each Tele Atlas share, Chief Financial Officer Kevin Rauckman said on a conference call today. The bid is 15 percent more than Amsterdam-based TomTom's 21.25 euro proposal on July 23. Tele Atlas rose 15 percent to 27.58 euros in Amsterdam.

``A bidding war has started,'' said Jesper Kruger, who helps manage about $64 billion at ATP in Copenhagen. ``TomTom needs this asset, so they will have to increase their offer by at least 20 percent.''

TomTom plunged 19 percent to 55.06 euros in Amsterdam, the largest decline since the initial public offering in May 2005. Garmin lost $13.08, or 11 percent, to $107.40 on the Nasdaq Stock Market, the biggest drop in a year. Tele Atlas shares have traded higher than TomTom's offer since Oct. 1.

Redrawing the Map

``TomTom will have to bid 26 euros or more for the shares of Tele Atlas. It is of great strategic importance to TomTom as Nokia bought Navteq,'' said Frits de Vries, an analyst at Rabo Securities in Amsterdam who rates Tele Atlas shares ``hold.'' ``Both companies are in solid financial condition, although Garmin is bigger. This could be a long takeover battle.''

The worldwide retail market for portable navigation devices will be worth 6.96 billion euros this year, up from 5.8 billion euros in 2006, said Chris Jones, an analyst at Canalys.

``Assuming Navteq goes to Nokia, then Tele Atlas is the only alternative map supplier,'' Jones said. ``Organically, it would take 18 months and $600 million to build it.''

Garmin's offer is 7.2 times Tele Atlas' estimated revenue this year, less than Nokia's offer for Navteq, which is 10.2 times anticipated revenue in 2007. Navteq is profitable, while Tele Atlas isn't.

Garmin and TomTom expect to ship a combined 20 million devices this year as they add traffic data and services, while prices fall to as little as $150.

Garmin Financing

Tele Atlas, based in the Dutch town of Den Bosch, said it will review the offer and make a statement ``as soon as reasonably possible.'' TomTom, the world's largest maker of car navigation devices, is studying ``what's going on,'' spokesman Taco Titulaer said, declining to elaborate.

Garmin plans to start the bid before Dec. 4, when TomTom's offer expires. Garmin said it has ``sufficient'' financing commitments and more than $1 billion of cash available.

``Given the high growth and rapid change the navigation market has undergone to date, we feel that now is the right time for Garmin to move ahead with this proposed combination with Tele Atlas,'' Chief Executive Officer Min Kao said in the statement.

Raised Forecasts

The company also reported earnings that beat analysts' estimates today and raised its annual sales and profit forecasts.

Third-quarter net income grew 57 percent to $193.1 million, or 88 cents a share, from $123 million, or 56 cents, a year earlier, Garmin said in a separate statement. The average of 13 analyst estimates compiled by Bloomberg was for earnings of 82 cents. Revenue increased 79 percent to $729 million.

Garmin said full-year sales will top $2.9 billion and earnings will exceed $3.40 a share. The company on Aug. 1 said that 2007 revenue would exceed $2.8 billion and earnings would be more than $3.15 a share.

TomTom has said it wants to use feedback from its more than 12 million users to constantly update Tele Atlas maps with road changes. Garmin has ``very much the same capabilities although a bigger universe,'' company spokesman Jon Cassat said on a conference call with reporters.

Garmin said it plans to make Tele Atlas maps available ``to the entire navigation market on a non-discriminatory basis.''

Market Share

TomTom forecasts the North American market for personal navigation devices will increase to 8 million to 9 million units this year from 3 million in 2006. In Europe, the market will almost double in volume to 15 million to 16 million units from 8.5 million, TomTom estimates.

TomTom said last week it had 51 percent of the European market for portable navigation devices at the end of the third quarter, and 27 percent of the North American market. Garmin said today its North American market share is about 50 percent, and that its European market share ``continues to improve.''

Garmin's and TomTom's portable devices for cars and other vehicles have a touch-screen display and use the global positioning system, or GPS, a satellite navigation system for determining one's precise location on the planet.

To contact the reporter on this story: Marcel van de Hoef in Amsterdam at mvandehoef@bloomberg.net

Last Updated: October 31, 2007 16:05 EDT