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Cisco extends offer period for Tandberg bid

November 10, 2009 | Chris Payatagool

Thumbnail image for Thumbnail image for cisco_buys_tandberg.jpgBy Richard Solem and Ritsuko Ando

OSLO/NEW YORK - Cisco Systems Inc (CSCO.O) extended on Monday its $3 billion tender offer for Tandberg ASA (TAA.OL) by nine days, after some shareholders of the Norwegian videoconferencing company demanded a higher price.

Cisco, the largest U.S. network equipment maker, said it would extend its offer, originally due to expire on Monday, to November 18, but the terms and conditions of its 153.50 crown-per-share offer would remain unchanged until then.

Analysts said they expect Cisco to sweeten its bid, possibly to around 160 crowns or 170 crowns. Tandberg shares were up 0.53 percent at 151.80 crowns on Monday and Cisco shares were up 0.3 percent at $23.90.

ABG Sundal Collier analyst Hallgeir Hollup said he believes that Tandberg, the world's leader in videoconferencing products, is worth more.

"We also believe that Cisco will hike the bid," he said.

Cisco did not disclose the tally of shareholders who had tendered their shares and those who hadn't, although groups representing around 30 percent of shareholders have publicly opposed the deal.

A spokesman for Cisco's Norwegian agent, Carnegie, told Reuters that information about how many shares were tendered would be released on Tuesday.

The U.S. company reiterated its statement that its offer represents a good premium and is backed by Tandberg's board of directors.

"We believe that we're paying a fair price for a quality asset," a Cisco spokeswoman said after announcing the extension.

Cisco Chief Executive John Chambers said last week that he believed the company could close the Tandberg deal but also raised the prospect of walking away, saying that there was no such thing as a "must have" deal.

KEY GROWTH AREA


While walking away is indeed an option, few analysts expect Cisco to opt for that, as it has repeatedly touted online videoconferencing as a key growth area.

Many analysts said they expect Cisco to negotiate with dissenting shareholders. Aside from a higher offer, analysts have said possible scenarios include Cisco accepting a lower stake, waiving its initial requirement that 90 percent of Tandberg shareholders tender their shares.

But analysts have said Cisco may be uncomfortable with a limited stake, particularly as this would be its first public European takeover.

Tandberg's products would help fill the gap between Cisco's high-end, TelePresence video meeting service for executives and its WebEx online meeting software.

A combination of Tandberg's expertise in videoconferencing and Cisco's sales prowess would create a strong market leader, analysts have said.

Rune Selmar, director at investment firm Rasmussengruppen, part of the dissident group, confirmed that it had not accepted the offer and noted that Cisco had not changed its terms.

"As such, there's no reason to reassess the offer," Selmar said.

Amund Lunde, chief executive of Oslo Pensjonsforsikring, another opponent, reiterated his stance.

"We repeat what we have said earlier, that Tandberg is worth more than what Cisco has offered, and there's nothing in our assessment that has changed in that respect."

Analysts have said Cisco's offer, regardless of when and how it closed, could trigger more deals involving video conferencing companies like No. 2 player Polycom Inc (PLCM.O). Other technology companies like Hewlett-Packard Co (HPQ.N) also offer high-end video conferencing.

Cisco could keep extending the deadline and continue to negotiate with shareholders for a maximum of 10 weeks, or until mid-December.

($1=5.627 Norwegian Crown)

(Reporting by Richard Solem in Oslo and Ritsuko Ando in New York, with additional reporting by Joergen Frich in Oslo; editing by Tiffany Wu and Gerald E. McCormick)

[via Reuters]









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