Panta Capital, a London-based financial firm that represents some Tandberg shareholders, and Scott & Associates, a Swiss firm, have both said the offer Cisco is making for Tandberg is too low.
In an open letter to Cisco posted on Panta's Website Nov. 6, the two firms question why Cisco officials use Tandberg's closing stock price of July 15 as the comparison point for the $3 billion bid, which the networking giant announced Oct. 1. Cisco officials have said they used the July date because it was when speculation about Cisco buying Tandberg first began circulating, and the $3 billion represents a 38.3 percent premium over the stock price of that day.
However, Panta and Scott said Tandberg had been talked about as a takeover target for the past 18 months by not only Cisco but others, including Silver Lake Partners. They also argued that Cisco had not taken into account the fact that the stock prices of both Tandberg and its rival, Polycom, had risen significantly between July 15 and Oct. 1, a reflection of business strength beyond the takeover rumors.
Cisco has not taken into account historical trading value, peer valuation and operational performance, the two firms said.
In addition, given that Cisco officials have said video conferencing is a key part of the $34 billion collaboration market opportunity envisioned by Cisco officials, and that Tandberg could see its revenues grow faster as part of Cisco, the $3 billion is too low an offer, the letter said.
"We believe that a higher, more appropriate price for the acquisition of Tandberg, taking into account its growth profile and the substantial scope for sales and cost synergies, is not in conflict with Cisco's respect of the principles of prudence and financial fairness," the letter said.
The "principles of prudence and fairness" refers to a Nov. 2 blog post by Ned Hooper, Cisco's chief strategy officer, who argued that while Cisco stands to benefit from buying Tandberg, there are risks involved for Cisco. Given those risks, $3 billion is a fair price for Tandberg, Hooper said, adding that Cisco has a history of strong financial returns from the companies it buys, and that "Cisco will always act with fiscal prudence."
Cisco has set a Nov. 9 deadline on the offer, and has said it needs 90 percent of shareholders to approve the deal before it moves forward. Analysts have predicted that eventually Cisco will increase its offer, though there also has been speculation that the company will walk away from the deal, which already has the backing of Tandberg's board of directors.
Investors that hold about 30 percent of Tandberg's stock already have said they will not vote for the deal, preferring instead to seek a higher bid from Cisco or another company or to keep Tandberg independent.
During a conference call to announce Cisco's quarterly earnings Nov. 4, CEO John Chambers expressed confidence that the deal will be done, but also said Cisco didn't have to have Tandberg to make its video conferencing push.
What Cisco really stands to gain by acquiring Tandberg is an expanded customer base and products that already are established in the small and midsize business space. Cisco's TelePresence technology has strong adoption rates in enterprises.