Cisco Pressed to Raise Tandberg Bid

Peter Germonpre, Panta Capital's managing director, told Reuters that a fair bid price would be at least 170 Norwegian krone ($29.9).

This is not the first time that Cisco's Tandberg bid has been challenged. Last month the Financial Times reported that some 24% of Tandberg shareholders do not intend to tender their shares, but would be open to a higher bid from Cisco or another company.

Cisco CEO John Chambers has been making a song and dance about video for years, although his firm's efforts have been largely centered on the high end of the market. Tandberg would extend this reach downstream. The Norwegian firm enjoyed sales of $808 million last year, and is seen as the 800-pound gorilla in video conferencing.

With companies like Hewlett-Packard(HPQ), Apple(AAPL), Microsoft(MSFT ) and Huawei, all ramping up their video conferencing strategies, few observers were surprised by Cisco's Tandberg bid.

Already approved by the Tandberg board, the networking giant had hoped to get regulatory approval for the Tandberg deal by the first half of next year.

With cash and investments of $35.4 billion exiting its recent first quarter, Cisco can certainly afford to increase its Tandberg bid. The initial deal was seen as boosting sales of the company's core networking products, and also forced down shares of Tandberg rivals Polycom and Radvision(RVSN).

Polycom has itself been touted as a potential acquisition target, with Avaya mentioned as a possible suitor.

Cisco has been on an M&A tear in recent months, throwing down $2.9 billion to acquire Starent(STAR) and spending $183 million to buy ScanSafe.

In a statement emailed to TheStreet, Cisco said that Tandberg's shareholders are getting a good deal.

"We believe we are paying a fair price for a quality asset, and our offer comes recommended by the Tandberg Board of Directors," it said. "As noted in Tandberg's communications to the Oslo Exchange, Cisco's offer represents a 38.3% premium to the closing share price on July 15 - which is one day prior to major media reports of a possible transaction."

"Further, Cisco's general approach to M&A activities is that no acquisition should be pursued or completed if it runs counter to the broader principles of prudence and financial fairness."

Cisco shares fell 18 cents, or 0.75%, to $23.75, Friday, despite a modest rally in tech stocks that saw the Nasdaq rise 0.18%.

-- Reported by James Rogers in New York

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