Stockholders May Block Cisco's Purchase of Tandberg
Cisco's bid for videoconferencing vendor Tandberg could be in trouble: Stockholders representing 24 percent of the shares in Tandberg do not intend to accept Cisco's US$3.0 billion offer, a Swedish stockbroker said on Thursday.
The stockholders' refusal is enough to block the deal. One condition of Cisco's offer is that holders of 90 percent of Tandberg's stock accept, according to Geir Olsen, President of Europe, Middle East and Africa at Tandberg. He had no further comment on the rejection.
Cisco is aware of the stockholders' decision, but doesn't have any comment to make, according to a company spokeswoman.
On Oct. 1 Cisco announced an agreement to buy Tandberg for about $3.0 billion in cash. The proposal was recommended unanimously by Tandberg's board of directors.
The stockholders feel that Tandberg can be successful on its own, according to Swedish broker SEB Enskilda, which represents 21 Tandberg stockholders holding 24 percent of the company's shares. However, those stockholders are open to a sweetened offer from either Cisco or another company, SEB Enskilda said.
The stockholders are looking to shake more money from Cisco, according Jeff Mann, research vice president at Gartner. These kind of moves are common, and Cisco has to some extent invited it by being so vocal about the importance of videoconferencing, he said
A competing offer from another company is less likely, according to Mann, but there are a handful of candidates that could make one, including Avaya and its owner Silver Lake Partners, Siemens and private equity group Gore, or Hewlett-Packard, according to Mann.
Avaya and Siemens both have other problems to deal with, but a competing offer from HP makes more strategic sense, Mann said: It and Cisco have been going head-to-head more frequently in recent times, Mann said.
When the deal was announced, Tandberg CEO Fredrik Halvorsen said the deal comes at the right time, and is the right transaction. Cisco CEO John Chambers called it "a win-win for everybody involved".