Networking and communications equipment maker Cisco Systems, Inc. (CSCO) Monday boosted its recommended voluntary cash offer to acquire Norwegian videoconferencing company Tandberg ASA (TADBY.PK, TADBF.PK) to NOK 170 per share for an aggregate purchase price of about NOK 19 billion, or US$3.4 billion. The company also extended the acceptance period and noted that the revised offer represents the final price for this transaction. Cisco has revised the offer price after Tandberg shareholders said the US$3 billion offer made earlier was too low. Cisco said it now has shareholder acceptances in excess of 40% based on the new offer price. San Jose, California-based Cisco has also decided to increase the interest payable on the new offer price to a rate of 3% from 1.75%. Cisco has earlier received acceptances representing 10.49 million shares in Tandberg, or 9.37% of the shares and voting rights. Shareholders representing more than 30% of the outstanding shares, including Tandberg's largest shareholders Folketrygdfondet and OppenheimerFunds, have accepted the revised offer. This brings total shareholder acceptances to more than 40% of the outstanding shares committed to the deal.
The company added that all holders of Tandberg shares, who have tendered their shares will automatically benefit from the revised price. It was in early October that Cisco announced its deal to acquire Tandberg through a cash tender offer for NOK 153.50 per share, totaling about NOK 17.2 billion, or $3 billion, and the acquisition was expected to close during the first half of calendar year 2010. The board of Tandberg had unanimously recommended that shareholders accept the voluntary cash offer. In mid-October, Swedish brokerage SEB Enskilda, which represents the 21 shareholders in Tandberg, had reportedly communicated to Cisco that the shareholders intend to reject the US$3 billion offer for Tandberg as too low. These shareholders, representing about 24% of the outstanding shares in Tandberg, said they do not intend to tender their shares at the current offer terms. At that time, SEB Enskilda said, "The shareholders are convinced that Tandberg will generate strong returns as an independent company, but are open to evaluate a higher offer from Cisco or a third party." The 21 shareholders, which include both international and Norwegian, are both long term and new owners in Tandberg.
Analysts had then said that Cisco has plenty of cash and could raise its bid to get the 90% shareholder approval it needs. Subsequently, on November 9, Cisco announced that it is extending the acceptance period for its offer to November 18, with terms and conditions remaining the same.
Networking gear maker Cisco mainly sells routers and switches to corporates, but it has diversified in recent years. The acquisition is said to expand Cisco' push into video-conferencing and escalates the company's rivalry with Hewlett-Packard Co. (HPQ).
Cisco also warned that in the event of not achieving the desired level of acceptances by the extended acceptance period, 17:30 p.m. CET, December 1, 2009, it will withdraw the offer and evaluate alternative ways to expand activities in the video communications market.
Earlier this month, Cisco reported a decline in first-quarter net income to $1.8 billion or $0.30 per share from $2.2 billion or $0.37 per share in the prior-year quarter. Non-GAAP net income was $2.1 billion or $0.36 per share, compared to $2.5 billion or $0.42 per share in the previous year. Net sales for the first quarter declined 12.7% to $9 billion from $10.3 billion in the year-ago quarter.
On November 3, Cisco signed a definitive deal to acquire the set-top box business of Hong Kong listed DVN Holdings Ltd., for $44.5 million, with a view to further its vision of the global connected home. Cisco said it will pay about $17.5 million upfront and the additional maximum amount of $27 million is payable over four years based on the achievement of specific sales milestones. The deal is expected to close in the first half of calendar year 2010 subject to standard closing conditions. CSCO closed Friday's regular trading at $23.71 on the Nasdaq. In the past 52 weeks, the shares have been trading in a range of $13.61 - $24.83, with a three-month average volume of 45.69 million shares.
TADBF.PK closed Friday's regular trading at $28 on the OTC, while TADBY.PK last traded on October 13 at $27.50.
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