Cisco Ups Bid for Tandberg to $3.4 Billion

Faced with the possibility of coming up short on the necessary shareholder support for its $3 billion bid for Tandberg, Cisco is upping its offer to $3.4 billion. Cisco says the offer is a final one, and has pushed the deadline for getting 90 percent shareholder support to Dec. 1. Cisco said this will be the final offer for the video conferencing company. The video conferencing space is heating up, as illustrated by Logitech's announcement Nov. 10 that it is buying LifeSize for $405 million.

Cisco Systems, facing the possibility of falling short of the needed shareholder support, has upped its offer for video conferencing equipment maker Tandberg to $3.4 billion.

Cisco's Nov. 16 announcement came two days for its deadline for gaining acceptance for its initial $3 billion of at least 90 percent of Tandberg shareholders. With the new bid, Cisco has moved that deadline to Dec. 1, and officials say that it has received acceptance of at least 40 percent of Tandberg shareholders, 30 percent of that based on the higher offer.

They also said the $3.4 billion was the final price they will offer for the Norwegian company, and that they could waive the requirement for up to 90 percent shareholder approval.

Cisco initially offered the $3 billion Oct. 1, calling the bid fair based on the Tandberg stock price of July 15, when officials said rumors of Cisco's interest in its rival began circulating.

However, investors who held almost 30 percent of Tandberg shares said they would not accept the bid, arguing that it was too low and that Tandberg should remain independent or accept a higher offer from Cisco or a third party.

Tandberg's board of directors already had supported Cisco's initial $3 billion bid.

Buying Tandberg would give Cisco greater traction in the SMB area of the video conferencing space. Cisco offers a host of products, including its TelePresence portfolio, in the video conferencing market, but most of the company's offerings are aimed at enterprises.

Tandberg products have greater presence among smaller and mid-tier businesses. The company is continuing to roll out new products as it awaits news of the Cisco acquisition.

On Nov. 17, Tandberg rolled out new features in its namesake management suite designed to make it easier for businesses to deploy Tandberg's E20 person video conferencing phones and Movi PC video conferencing technology to thousands of employees.

Cisco sees video as a key part of the larger $34 billion collaboration space, and other companies also are making a move to increase their video conferencing offerings.

Logitech announced Nov. 10 that it is buying video conferencing vendor LifeSize Communications for $405 million, putting it into competition with Cisco, Hewlett-Packard and Polycom.

Roopam Jain, an analyst with Frost & Sullivan, said at the time that the Logitech-LifeSize deal was a continuation of the consolidation happening in the industry, and that it could add further fuel to Cisco's intent to buy Tandberg.

"The communication giants are beefing up their collaboration portfolios," Jain said in an e-mail. "Cisco obviously sees the compelling need to fill a gap in its product line, i.e., for room-based videoconferencing, with a possible Tandberg acquisition. I think the LifeSize news should only solidify Cisco's intentions to acquire Tandberg."