Cisco To Buy Tandberg For USD 3 Billion

Cisco Systems Inc has struck a deal to buy Norwegian videoconferencing company, Tandberg for $3 billion in a bid to dominate the high-growing market of corporate video communications.

Analysts said the move ratchets up competition, and possibly more deals among video conferencing providers like Hewlett-Packard Inc and Polycom, and underscores Cisco’s focus on video conferencing which enables workers everywhere to interact with colleagues and customers online.

The acquisition of Tandberg helps Cisco fill the gap between its high-end TelePresence video meeting service for executives and its WebEx online meeting software used by millions of office workers.

Jefferies analyst Bill Choi said the combined company would have close to 50 percent market share, and the deal would help Cisco speed up growth of its video business.

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“We always expected Cisco to move downstream and this acquisition accelerates its time-to-market by at least 18 to 24 months,” Choi said.

“They realise that if they don’t find new purposes for the network they’re going to get commoditised,” said Gartner analyst, Ken Dulaney.

Tandberg said its board has recommended the Cisco offer to its shareholders and Chief Executive Fredrik Halvorsen said major shareholders had voiced support for the cash offer of 153.50 Norwegian crowns ($26.49) a share. Halvorsen will continue to lead the unit if the acquisition goes through.
The acquisition would be Cisco’s biggest since it bought WebEx for $3.2 billion in 2007, and follows its purchase of Flip Video digital camcorder maker Pure Digital Technologies.

“You’re going to see us more aggressive over the next 12 months than you have seen us as a company,” said John Chambers, CEO, Cisco. “We will be very aggressive with internal start-ups, partnering … and also in acquisitions.”

Cisco said it hopes to close the deal in the first half of 2010, subject to regulatory approval. Antitrust lawyers said the deal would give the company a broad portfolio that rivals would struggle to match and that regulators could take a close look at the deal, but most said it would likely get through.

Reuters