Ericsson tops Arris' bid for Tandberg Television

Stuart Corner
Tuesday, 27 February 2007 04:49

IT Industry - Deals

In a move that reflects growing urgency for comms equipment vendors to get into the TV space, Ericsson has trumped Arris Corporation's bid for Tandberg Television with an offer of $U1.4 billion, 10.4 percent higher than Arris' offer.

Tandberg, whose management had backed the Arris bid, described the Ericsson offer as "unsolicited" and said it would review it before commenting. Arris said it was assessing its options and would make no further comment.

Ericsson's cash offer represents a premium of 18.2 percent to Tandberg's 90-day volume weighted average stock price. Ericsson says it has already acquired 11.7 percent of Tandberg's shares and has entered into agreements for irrevocable acceptances of its offer covering a further approximately 13 percent.

Ericsson's move reflects a growing pre-occupation of global telecoms vendors with the TV space. When the Arris bid was announced, market research company Infonetics commented: "We've been anticipating this deal for some time as Arris really needed to make a splash in the video space and to keep pace with Cisco [which acquired Scientific Atlanta in 2005 ] and Motorola [which acquired set top box maker Kreatel in January 2006  and solid state video server maker Broadbus in July 2006 ] in the cable MSO market, where operators are beginning to look at switched digital video and video-over-DOCSIS. Arris is strong in voice and data, but until now, they've had no video play whatsoever."

It has also been suggested that Motorola might enter the bidding for Tandberg but Ericsson's 11.7 percent stake should give it the upper hand in any bidding.

Arris (Nasdaq: ARRS) said its move to acquire Tandberg would produce "a new company, unique in its ability to enable voice, video and data over any network and to any device." Tandberg claims more than 25 percent share of the global video processing market including solutions for advanced compression, on-demand and interactive television. Arris has its origins in LANcity which introduced the first residential cable modem in 1995. In 1996 LANcity was purchased by Bay Networks, and Bay Networks later purchased by Nortel which, in 1999 sold its broadband technology division to Arris Interactive.