Cisco has agreed to buy Norwegian videoconferencing company Tandberg for $3 billion in cash in its latest big bet that video will drive demand for its core data transmission gear.
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.
Mr Halvorsen will continue to lead the unit if the acquisition goes through.
Shares in Tandberg, which had almost doubled in value this year by persistent takeover speculation, were 11 per cent higher at the offer price of 153.5 crowns this afternoon, having traded at up to 156 crowns earlier in the day.
Cisco's shares were little changed in early US trade, at $23.56.
In October 2008 Tandberg ended takeover talks with an unnamed private equity player, blaming market turmoil. A person familiar with the matter said the bidder was technology specialist Silver Lake Partners.
"This [the Cisco offer] sounds like a pretty good price so I would think it will end up there," said analyst Martin Hoff of Arctic Securities. "But the bid will stand for four weeks and there might be other offers."
Potential rival suitors include Hewlett-Packard, which is also active in web collaboration. The market has also linked telecoms gear maker Ericsson with Tandberg.
The offer values Tandberg at about 23 times 2010 earnings, analysts say, slightly above US rival Polycom's multiple of 21.7.
The acquisition, if approved by shareholders and regulators, 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.
Reuters