Cisco Believes Tandberg Offer Is Fair
Cisco is playing hard ball after an executive said that its takeover offer of $3 billion for Tandberg is a fair price for the video conferencing rival
With the deadline nearing for its takeover offer of Tandberg, officials at Cisco Systems are sticking to their guns and have made it clear that the $3 billion (£1.8 billion) takeover offer is a fair one.
In a blog post, Ned Hooper, Cisco’s chief strategy officer, said the offer is a good one for shareholders of both companies, an argument that appears to contradict the predictions of analysts that Cisco would increase the bid in light of a number of Tandberg shareholders who are looking for more money for their company.
“Our offer price reflects this balance [between risk and reward] and is based on a simple premise for both sets of shareholders – fairness and value,” Hooper wrote. “Is a 38.3 percent premium fair for Tandberg shareholders? Absolutely. Does it lock in a superior return for Tandberg shareholders and protect them from future market risk? Yes. Does it also fairly reflect risks borne exclusively by Cisco shareholders? Yes.”
Hooper’s blog comes after reports surfaced that Cisco may drop its bid for Tandberg rather than up the price. The $3 billion deal, first announced 1 October after months of speculation, had been accepted by the Tandberg board of directors.
However, two weeks later, a group of shareholders that own 24 percent of Tandberg’s stock said they would reject the deal, saying they would rather Tandberg stay an independent company, although they said they would consider higher offers from Cisco or other parties.
Cisco’s offer officially expires on 9 November, and requires a 90 percent approval from Tandberg shareholders.
Cisco officials saw Tandberg as a way of adding greater video capability to their collaboration offerings. In his blog, Hooper said the collaboration market is a $34 billion (£21 billion) opportunity for the company and that it will rapidly evolve from voice to video.
Industry analysts saw the addition of Tandberg as a way of giving Cisco a greater presence in the SMB portion of the video conferencing space. Cisco’s offerings currently are aimed primarily at larger enterprises.
Cisco has been working hard to build up its video capabilities, both through internal innovation and acquisitions, such as Scientific-Atlanta in 2006 and Flip video camera maker Pure Digital Technologies this year.
However, Hooper said Cisco needs to balance the benefits with the risks, which include successfully completing its first ever purchase of a European company and the integration of sales and engineering teams that are spread over the United Kingdom and Norway, where Tandberg is based.
“The bottom line is that Cisco will always act with fiscal prudence,” he wrote.
