Cisco ups bid for Tandberg
US network equipment maker Cisco has raised its bid for Norwegian video conferencing equipment maker Tandberg, claiming its revised plan is backed by holders of more than 40 per cent of its shares.
Cisco’s new offer of 170 crowns per Tandberg share, up from the 153.50 crown bid that more than 90 per cent of shareholders had dismissed, values Tandberg at nearly 19 billion Norwegian crowns ($3.41bn). Few analysts expected Cisco to walk away, having repeatedly touted online videoconferencing as a key growth area, especially as companies save on travel costs during the downturn.
“We have not yet made a decision about this offer, but at this level I believe it has a fair chance of succeeding,” said Rune Selmar, director at investment group Rasmussengruppen, which owns about 0.6 per cent of Tandberg’s stock.
Panta Capital, a small London firm advising on merger arbitrage that had called the initial bid too low, said the new offer was “fair” and likely to succeed. “I think it’s a done deal now,” Peter Germonpre of Panta told Reuters.
Germonpre said the new offer was more in line with the valuation of the other major mid-tier video conferencing equipment provider, US Polycom He said the small group of shareholders whose views he had represented in his earlier statement would be more inclined to tender their shares. Even analysts who have a higher price target on Tandberg shares say the new bid will probably win shareholder approval.
“This still undervalues Tandberg, which is worth 180 crowns on a stand-alone basis and at least 200 with a takeover premium,” said Arild Nysaether, analyst at Fondsfinans. “But it is an improvement and stands a fair chance of coming through.”
Cisco said the offer, which expires on 1 December, was backed by Tandberg’s two largest shareholders, funds Folketrygdfondet and OppenheimerFunds, and had received acceptances from owners of more than 40 per cent of the stock.
“The new offer represents the ... final price for this transaction,” Cisco said in a statement. “If the offeror does not achieve the desired level of acceptances, the offeror will withdraw the new offer and evaluate alternative ways to expand Cisco’s activities in the video communications market,” it said, adding that it could waive the 90 per cent acceptance condition.
Cisco bought its way into the market with its purchase of desktop videoconferencing service Webex in 2007, and with it increasingly competes with Microsoft and Google, and to a lesser extent free calls provider Skype. Cisco, Hewlett-Packard and others lead the high-end of the market for so-called telepresence systems. Tandberg has a 40 per cent market share in the fast-growing mid-market for videoconferencing equipment, according to data from industry analysts Wainhouse Research, followed by Polycom.
No other company has publicly shown interest in a Tandberg bid, though analysts have talked of suitors such as Microsoft, Hewlett-Packard, International Business Machines and Avaya. Whether the deal closes or not, it could trigger more deals in the sector, with Polycom seen as a target.