Cisco warns it might abandon bid for Tandberg

Stuart Corner
Tuesday, 03 November 2009 03:22

IT Industry - Deals

Cisco has given the first real indication that it may walk away from its $US3b bid for video technology company, Tandberg in the wake of minority shareholders rejecting Cisco's initial offer as being too low.

Cisco announced its offer for the company at the end of September saying it would help it take a bigger share of a global collaboration market estimated to be worth $US34b annually but in mid October minority shareholders, who represent 24 percent of total equity, knocked back the $US3b offer. Reports, however suggested Cisco could afford to bump it the offer price as it represented a market premium on the share price of "only 11 percent."

The nearest thing to an official statement on Cisco's position comes from Ned Hooper, chief strategy officer who also leads Cisco's consumer business (the fact that he holds both these roles must say something about where Cisco sees its future growth) posted on the company's official blog site, The Platform.

Hooper said: "We strongly believe our offer is a very good price for Tandberg shareholders...[It] represents a 38.3 percent premium to the closing share price on July 15 - which is one day prior to major media reports of a possible transaction. The price also represents a 102 percent 12 month return for Tandberg shareholders, far surpassing global market index returns."

He claimed the price "lock[s] in a superior return for Tandberg shareholders and protect[s] them from future market risk" and "also fairly reflect[s] risks borne exclusively by Cisco shareholders."

But he warned "The bottom line is that Cisco will always act with fiscal prudence...We believe the time is right for Cisco and Tandberg to come together to help accelerate global adoption of collaboration technology through interoperable, standards-based products. However, no acquisition should be pursued or completed if it runs counter to the broader principles of prudence and financial fairness."

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