Cisco's Increased Offer for Tandberg No Surprise: Analyst
November 17, 2009
Cisco Systems’ recent offer to increase its bid for video conferencing gear maker TANDBERG comes as no surprise to industry analysts, who said
The world’s largest maker of computer networking gear this week increased its bid to acquire TANDBERG by $400 million to $3.4 billion. That proposed hike represents a 10 percent increase over Cisco’s initial offer.
“We’re not surprised by this at all,” Ira Weinstein, analyst and partner, Wainhouse Research, told unified communications in an interview today. “Our assumption is that the 10 percent increase came from an agreement with TANDBERG shareholders. Cisco did the right thing by upping the ante.”
TANDBERG has until Dec. 1 to accept the new offer, according to Cisco.
Cisco raised its bid to meet the demand of some TANDBERG stockholders. Some stockholders felt who that the initial $3 billion offer Cisco made in October undervalued the company.
With the acquisition, Cisco said it wants to integrate TANDBERG’s video endpoints and network infrastructure solution into its collaboration architecture, allowing intercompany and multi-vendor interoperability across its product portfolio. Cisco officials said the acquisition would help strengthen the company’s position in the $34 million collaboration market and expand its presence as a player in the videoconferencing sector.
TANDBERG, which operates joint headquarters in Oslo, Norway, and New York, offers telepresence, high-definition videoconferencing and mobile video products and services. The company designs, develops and markets systems and software for video, voice and data communication. The firm has 1,500 employees worldwide.
Weinstein said Cisco’s increase bid make sense and show’s Cisco’s commitment to join the video conferencing sector.
“The video conferencing industry has fared well in trying times,” Weinstein said. “So the market leader in the industry that is doing well probably wants additional bonuses for shareholders.”
Cisco officials said the latest bid is the firm's final offer. If Cisco doesn’t receive acceptance from at least 90 percent of TANDBERG shareholders, company officials said they would withdraw the offer and consider other ways to expand its activities in the video communications market.
“It is possible they will not make the 90 percent? It is absolutely possible, but we don’t think that is likely,” Weinstein said. “It will be interesting to see how this acquisition plays out.”
Amy Tierney is a Web editor for unified communications, covering business communications Her areas of focus include conferencing, SIP, Fax over IP, unified communications and telepresence. Amy also writes about education and healthcare technology, overseeing production of e-Newsletters on those topics as well as communications solutions and UC. To read more of Amy's articles, please visit her columnist page.
Edited by Amy Tierney