TomTom paid €2.9B for Tele Atlas at the peak — free phone maps then destroyed its market

In 2007 TomTom, the Dutch maker of Europe's best-selling standalone satnav devices, decided it needed its own map data and launched a takeover battle for Tele Atlas, the world's second-largest digital mapmaker. Its July offer of €2B was accepted by the Tele Atlas board, then US rival Garmin countered with €2.3B. TomTom raised its bid to €2.9B in November 2007 and won — Garmin withdrew after striking a content deal with rival mapmaker Navteq. Shareholders approved the deal in December 2007 and it closed in June 2008, at what turned out to be the peak of the personal navigation device boom.

The market then collapsed underneath the acquisition. The iPhone had launched the year before, and from 2009 Google and Nokia offered free turn-by-turn navigation on smartphones. TomTom's device sales went into reverse in 2008, the very year the deal closed. Revenue recovered to around €1.5bn in 2010, but the debt taken on for Tele Atlas became a burden: during the credit crunch TomTom was forced to renegotiate its loans, and it issued a profit warning in June 2011.

The job cuts tell the story of the decline. TomTom announced 115 redundancies in January 2009, reorganised in October 2011 to reflect 'the switch towards inbuilt systems', and in December 2011 cut 10% of its workforce — around 457 jobs, 255 of them compulsory. Consumer satnav sales fell 28% in 2011 and 40% in the fourth quarter alone. Full-year 2013 sales were €963m, down 9%, with net profit down from €129m to €20m. The company that had been worth around £5bn in 2007 saw its shares lose 67% of their value in 2011.

TomTom survived by becoming a different company. The maps and traffic business built around Tele Atlas became the foundation of a pivot into built-in automotive navigation and location data: research partnerships with Volkswagen (2014) and Bosch (2015) for self-driving maps, the sale of its fleet-management arm to Bridgestone in 2019, and a 2020 deal that put TomTom data in Huawei's Petal Maps. The company still exists — but the standalone satnav business that paid €2.9B for those maps no longer does.