We have already covered the Nokia (NYSE:NOK/ADR) buyout of NAVTEQ Corp. (NYSE:NVT). It is somewhat interesting that NAVTEQ would have allowed itself to be acquired in a no-premium buyout, even if shares are up 200% from the lows over the last 52-weeks. NVT is trading down almost 2% at $76.50, and it appears that with the market liquidity and deal-making down that Wall Street doesn’t think that a premium buyout is likely. NVT has a $7.5 Billion market cap.
This is actually punishing shares of Garmin Ltd. (NASDAQ:GRMN) on additional competitive and pricing pressure fears. Garmin shares are down 12% at $105.00 in early trading. Garmin is roughly three-times the size of NAVTEQ in size of market cap and it is up roughly 150% from 52-week lows. This company has been a winner so far, and we expect analysts to come out mixed with some defending shares and some saying Nokia will be tough.
- Jim Cramer recently named it an immune growth pick;
- Garmin was probably one of the Window Dressing stock beneficiaries;
- We also showed how these were a major winner after last earnings.
What is interesting is that Nokia is also down over 2.5% at $36.85. The reason is not likely the dilution as much as the fact that this "could" stress some carrier relationships. Sure the dilution to the stock will matter, but if Nokia hasn’t anticipated at least some pushback Wall Street would have reason for concern. Keep in mind that it is a "big IF" because you know they thought this through and through.
We have been reviewing another lesser-known beneficiary of the major growth in GPS systems and in GPS for guidance in cell phones as a potential buyout candidate for the Special Situation Investing Newsletter, although the current position is unclear because of relative values and the valuation of intellectual property as far as the real worth versus the perceived worth.
Trimble Navigation Ltd. (NASDAQ:TRMB) is not seeing any pressure based upon the merger, although arguably it is because that company may be deemed as more protected despite having the lowest market cap and valuations in thr group. But that is another story.
Jon C. Ogg
October 1, 2007