Tandberg to Acquire Conferencing Upstart Codian for $270 Million

 
 
By Paula Musich  |  Posted 2007-09-07
 
 
 
Videoconferencing vendor Tandberg on Sept. 6 announced its plans to acquire upstart Codian for $270 million.

The Oslo, Norway, company hopes to capture more momentum in the fast-growing high-definition segment of the videoconferencing market with Codian, according to Geir Olsen, executive vice president of strategy and marketing at Tandberg in London.

"This is about capturing the future growth opportunities we see in the videoconferencing market, telepresence market and wider IP communications landscape. This gives us a more scalable product portfolio and more R&D resources," said Olsen.

The two vendors different strengths in different areas make the combination a natural fit, according to Will MacDonald, chief strategy officer for Codian, also in London.

"High-definition infrastructure is the real crux to it. Tandberg is leading the high-definition endpoint space. In their earnings conference call for the second quarter they said 80 percent of their endpoints are high definition. They have nothing for high-definition infrastructure. Thats the real win," he said.

Also, because Codian emphasized interoperability with all endpoints, its high-definition infrastructure already supports those fast-growing Tandberg high-definition endpoints, MacDonald added.

Codian, with its presence in the UK, also makes it easier for Tandberg to recruit additional talent, Olsen said.

To read more about Codian, click here.

Other synergies between the two companies include Tandbergs emphasis on multinetwork support versus Codians strength in pure IP networks with its high-definition infrastructure, and Codian brings a unique strength in transcoding.

"Our existing product line has very important features for the federal market with IP V6 and other things the federal markets require, so we will be adapted to different customers needs," said Olsen.

At the same time, Tandbergs TMS management system is a plus for Codian. "The first piece of engineering well do is support their management suite with our infrastructure. Its a strength that they can manage everything," said MacDonald.

Although Tandberg, with its 900 employees, dwarfs the 5-year-old Codian, which has 110 employees, MacDonald believes Codian will have significant "influence" on the combined entity, which will give competitor Polycom a stronger rival.

In fact, Tandberg is anxious to retain all the Codian employees, including the company founders and CEO David Holloway, both officials said.

And although Codians bookings for the first quarter were $12 million, it is seeing a significant growth spurt now, according to MacDonald. "The first quarter was healthy. Now were going nuts," he said. The acquisition is expected to close by the end of September.

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