Cisco splashes out on Tandberg

Cisco has agreed to buy Norwegian videoconferencing company Tandberg for $3 billion in cash, its latest big bet that video will drive demand for its core data transmission gear.

Cisco splashes out on Tandberg

The acquisition will fill the wide gap between Cisco’s high-end TelePresence video meeting service for executives and its WebEx tool used by millions of office workers for online meetings, and could bring videoconferencing to a mass market.

Tandberg’s board has recommended the Cisco offer to its shareholders and chief executive Fredrik Halvorsen told investors that major shareholders had voiced support for the offer of 153.50 Norwegian crowns ($26.49) a share.

Halvorsen will continue to lead the unit if the acquisition goes through.

In October 2008 Tandberg ended takeover talks with an unnamed private equity player, blaming market turmoil. A person familiar with the matter claims the bidder was technology specialist Silver Lake Partners.

“This sounds like a pretty good price so I would think it will end up there,” says analyst Martin Hoff of Arctic Securities. “But the bid will stand for four weeks and there might be other offers.”

Potential rival suitors include HP, which is also active in web collaboration. Ericsson, Juniper, IBM, Sony and Siemens have also been linked with Tandberg.

The acquisition will be Cisco’s biggest deal since the world’s top maker of internet routers and switches bought WebEx for $3.2 billion in 2007.

Chief executive John Chambers says Cisco, which had a cash pile of $35 billion, will step up the acquisition pace. “You’re going to see us more aggressive over the next 12 months than you have seen us as a company,” he says. “We will be very aggressive with internal start-ups, partnering… and also in acquisitions.”

Technology merger activity is picking up as the market improves, and borders between sub-sectors are breaking down. PC maker Dell recently bought IT services firm Perot Systems, and software maker Oracle bought hardware firm Sun.

Cisco says it hopes to close the deal in the first half of 2010, subject to regulatory approval.

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