DealZone

Tandberg’s last stand

Cisco says it has 84 percent of the Norwegian videoconferencing company and is more likely to pull the offer than raise it. And the giant U.S. router maker will probably settle for something less than the 90 percent it had said it would need to trigger the takeover.

Analysts say Cisco will gain operational control of Tandberg at the current acceptance level, limiting the influence of minority owners. Cisco is extremely acquisitive and has a premier class of dealmakers on its M&A staff. The company’s brain trust checkmated Tandberg with four moves: three deadline extensions and an increase in the offer price of 10 percent. That appears to have been as effective as it needed to be. The original offer was rejected by more than 90 percent of Tandberg shareholders.

Tandberg holds 40 percent of the mid-tier market for videoconferencing, according to Wainhouse Research. Cisco CEO John Chambers has said online videoconferencing is a key growth area that is on the brink of more widespread adoption. High-quality, real-time videoconferencing can help companies cut travel costs, and Cisco believes it can do more, such as helping businesses like retailers, banks and hospitals launch services from remote locations.

Tandberg shareholders take on Cisco

Acquisitive by nature, with a famed M&A team at hand and a couple of different bids already in the market, Cisco Systems is no stranger to stakeholders in its takeover targets trying to get a better deal. So news that investors holding 24 percent of the shares in videoconferencing firm Tandberg have snubbed Cisco’s $3 billion bid shouldn’t rattle the company too much.

A Norwegian analyst figured it was possible Cisco might raise its 153.50 crowns-per-share bid by 11 percent. But investors aren’t nearly as optimistic about Cisco opening up its wallet or a rival bidder emerging. Tandberg shares are hovering at only about a crown above Cisco’s offer price, even after the call to arms from existing shareholders.

The one-month tender period for Tandberg shareholders began on Oct. 9, and Cisco needs acceptances from at least 90 percent of shareholders to fully acquire the company. Analysts say it could opt for a smaller stake if the price for the whole company isn’t right.