Cisco agreed to acquire video conferencing rival Tandberg for $3 billion in cash, the latest move in the networking giant's hungry push in the collaboration market. Cisco believes such enterprise video tools are a cornerstone of the $34 billion collaboration technology market. In buying Tandberg, Cisco is removing a rival and strengthening its own video infrastructure offerings, particularly in European markets, where Tandberg was strong.
Cisco Oct. 1 agreed to acquire video conferencing rival
Tandberg for $3 billion in cash, the latest move in the networking giant's
hungry push in the collaboration market.
The bid is an 11 percent premium over the Sept. 30 closing
price of Tandberg's stock, and a 25 percent premium over the
three-month average closing
price for the Norwegian company. The premium purchase in a relatively
lackluster economy underscores the importance Cisco places on video for
Tandberg is a leading maker of "video endpoints and
network infrastructure," or computer servers and software that help large
businesses shuttle video to their employees over the Internet. Cisco is also a
major provider in this space, focusing on telepresence, which allows employees
to conduct face-to-face meetings through computer and television screens,
leveraging video carried over the Web.
Enterprise executives use technology from
Tandberg and Cisco to broadcast live messages to thousands of
employees. Corporate employees use solutions from these vendors to hold
video conference meetings with colleagues located worldwide in remote
While Cisco sells its video conferencing technology to
larger businesses, Tandberg
also offers gear to medium-sized businesses and makes software for managing video
Cisco Chairman and CEO John Chambers said on a conference call today
that Tandberg does an "amazing job" selling to these mid-level
businesses and delivering video to desktops.
"When we began to look at this combination, we saw an opportunity to
hit a tipping point in the collaboration market," Chambers said, noting
that Tandberg marks Cisco's first bid for a publicly traded company
outside the United States.
Yankee Group analyst Zeus Kerravala said he was surprised Cisco had not bid for Tandberg sooner, noting that Cisco's current telepresence software is not meant
for ad hoc communications. With Tandberg, Cisco will be able to satisfy the larger corporate video market.
Cisco believes enterprise video tools are a cornerstone
of the $34 billion collaboration technology market
The company started this march in 2006, when it acquired
IP TV provider Scientific Atlanta for $6.9 billion, and then went on to acquire
Web conferencing specialist WebEx for $2.9 billion in 2007. Cisco this year also bought
Pure Digital, maker of the popular Flip handheld video recording device.
In buying Tandberg, Cisco is removing
a rival and strengthening its own video infrastructure offerings.
Cisco expects to complete the acquisition, recommended
unanimously by Tandberg's directors, during the first half of 2010. Should the
deal close, Cisco will integrate Tandberg's technology into its own
Tandberg CEO Fredrik Halvorsen will lead the new
TelePresence Technology Group, reporting to Marthin De Beer, senior vice
president of Cisco's Emerging Technologies Group.
Cisco did not specify how many Tandberg employees it
would retain, saying only in a statement that the company's 1,500 employees "will
be extremely important as Cisco's team continues to drive video innovation and
Read more about this acquisition on TechMeme here