Cisco-Tandberg Deal Likely Not in Peril

Cisco's deal for Tandberg will likely pass easily through the EU approval process.
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(Updated to include results of Cisco's tender so far for Tandberg shares).

NEW YORK (

TheStreet

) -- As

Oracle

(ORCL) - Get Report

and

Sun

(JAVA)

get a good grilling, the big bad European Union is not likely to spoil

Cisco's

(CSCO) - Get Report

deal for Norway's

Tandberg

.

Europe's

antitrust regulators have held up the pending

$7.4 billion Oracle merger with Sun, with a formal objection to the plans for the two database software products set to combine.

But the commission isn't likely to find any obvious competitive conflicts should Cisco and Tandberg's video merger reach review, says Peter Crowther, antitrust attorney with Dewey & LeBoeuf in London.

"There's no direct competitive constraint between the two," says Crowther. "It's basically a bolt-on to Cisco's existing capabilities. It brings the video system in house rather than doing it on an outsource basis."

"It's difficult to see how the commission would object to it," Crowther says.

Cisco Chasing Google

Image placeholder title

Cisco agreed last month to use $3 billion of the $29.1 billion in

cash it has stashed overseas

to add Tandberg to its video-conferencing operation.

Meanwhile, in a press release issued Tuesday, Cisco said it holds rights to acquire 10,493,298 shares in Tandberg, representing 9.37% of Tandberg's shares and voting rights. Cisco's takeover bid is contingent on the company acquiring 90% of Tandberg's shares. A group of Tandberg holders is seeking a higher bid.

Cisco said it would evaluate whether or not to withdraw its offer after the tender closes on Nov. 18.

Cisco already owns WebEx, a premier Internet video meeting service. The move would dwarf smaller players in the sector such as

Radvision

(RVSN)

and No. 2

Polycom

(PLCM)

, but it wouldn't be the first market in which Cisco took a dominant position.

Don't expect the EU to play the role of giant killer here, though. The regulators have flagged very few deals in tech.

The most notable rejection was

GE's

(GE) - Get Report

failed bid for

Honeywell

(HON) - Get Report

in 2001. And prior to the GE move, the EU objected to

Boeing's

(BA) - Get Report

acquisition of rival

McDonnell Douglass

in 1997, but a year later the European regulators approved of the deal.

More recent tech deals have sailed through, including the $3.1 billion

DoubleClick

purchase by

Google

(GOOG) - Get Report

last year, which eventually received the EU's blessing after U.S. regulators gave the Net advertisers the thumbs-up.

There was some concern that the tie-up between No.1 phone maker

Nokia

(NOK) - Get Report

and No.1 GPS satellite map maker

Navteq

would hinder access to the digital map supplier, but those fears were allayed.

And similarly, GPS device maker

TomTom

was expected to receive EU scrutiny for its buy of

TeleAtlas

in 2007 for the same reasons, but both deals navigated through without a hitch.

"Typically 99% of transactions go through in phase one of the EU review," says Crowther, who served as a consultant to the regulatory agency in the late 1990s concerning deregulation of European phone monopolies.

Crowther predicts that Oracle and Sun will get conditional approval while Cisco and Tandberg will fly through in the first phase with no conditions.

-- Written by Scott Moritz in New York.