Cisco is resisting calls to increase its £1.9bn bid for
Norwegian videoconferencing firm Tandberg, its first European
acquisition.
Cisco's chief strategy officer Ned Hooper said last night in a
blog that Cisco's original bid is fair and is a good deal for
Tandberg shareholders.
Hooper said he was responding to market speculation and media
rumour about
the deal.
"We strongly believe our offer is a very good price for Tandberg
shareholders," he said.
He pointed out that Tandberg itself said the offer represents a
38.3% premium to the closing share price on 15 July 2009 and
represents an annual return of 102% to
Tandberg shareholders, which is better than most stock
markets.
He noted that the benefits of the deal are shared by Cisco and
Tandberg shareholders, but that
Cisco shareholders run all the risk.
"We have also been required to consider currency exchange costs
which, at the current rates, have added at least $100m to our
overall expense," Hooper said.
Hooper said the communications market is currently dominated by
voice traffic, but Cisco and its competitors believe the future
lays in video. He estimated the potential market at $34bn.
"It will require substantial innovation and investment to drive
this market transition," he said. "However, no acquisition should
be pursued or completed if it runs counter to the broader
principles of prudence and financial fairness. The bottom line is
that Cisco will always act with fiscal prudence."