Cisco resists calls to raise £1.9bn Tandberg offer


Cisco resists calls to raise £1.9bn Tandberg offer

Ian Grant

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."

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