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Cisco: Tandberg Bid Rejected By Group With 24% Stake As Too Low

October 19, 2009 | Chris Payatagool

TANDBERG_Telepresence_T3.jpgBy Eric Savitz

Cisco may have to dig a little deeper to close the deal on Tandberg.

A group of 21 investors who together hold 24% of the videoconferencing company's shares have rejected Cisco's $3 billion bid for the company, according to Reuters, which quoted the CEO of Oslo Pensjonsforsikring, a life insurer with a 1% stake, as saying the offer is too low. The current Cisco bid is 153.50 crowns per share; the piece said the bid might have to increase to 170 crowns.

In trading in Oslo, Tandberg shares have moved up 3.20, or 2.1%, to 155.80 crowns, slightly above the current Cisco offer.

CSCO today is down 4 cents at $24.34.

Update: Cisco said in a statement that it could not comment on the Tandberg holders move, but that it has previously said it is offering a fair price. Here's the full text of their response, which comes from a spokesperson for the company:

    "We are aware of statements made by Tandberg shareholder[s] and as we are currently in the middle of a tender offer process, we are not able to comment. We have stated previously that we believe we are paying a fair price for a quality asset and our offer comes recommended by the Tandberg Board of Directors. As noted in Tandberg's communications to the Oslo Exchange, Cisco's offer represents a 38.3% premium to the closing share price on July 15 - which is one day prior to major media reports of a possible transaction."‪

Update 2: William Blair analyst Jason Ader asserts that there is a high probability that Cisco will raise its offer, noting that Cisco is paying only an 11% premium to the price of the stock on the day before the bid. He thinks they could cinch the deal by offering 10%-15% more - or the 170 crown price noted above. He says this is a highly strategic deal for Cisco, and that walking away now "would be contradictory and puzzling to Cisco shareholders, especially given Cisco's huge cash reserves."

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