Cisco to buy videoconferencing vendor Tandberg for $3B

'Cisco paid a lot', an analyst said of the offer, which was 11 percent over Tandberg's last closing share price

Cisco Systems has signed an agreement to buy videoconferencing vendor Tandberg for about $3.0 billion, it said on Thursday.

UPDATE: More analysis of the Cisco-Tandberg deal here

Cisco Systems has signed an agreement to buy videoconferencing vendor Tandberg for about US$3.0 billion, it said on Thursday.

Tandberg's video endpoints and network infrastructure products will be integrated into Cisco's collaboration products, according to Cisco. When the deal is done Tandberg's CEO Fredrik Halvorsen will lead a new TelePresence Technology Group at Cisco, the company said.

Catch up on Cisco's other buyouts in our slideshow of 2009's hottest tech M&A deals

Cisco has been pushing videoconferencing for a number of years, and is already reselling some of Tandberg's products, according to Steve Blood, vice president at market research company Gartner.

The acquisition plugs the gap between Cisco's HD-based telepresence systems and its Unified Video Advantage system for desktop videoconferencing by adding room-based conferencing that supports standard definition video, he said.

"It is a good acquisition, but Cisco paid a lot," said Blood, who thinks that Cisco is better-equipped to grow the videoconferencing market than Tandberg on its own or competitors such as Polycom.

The acquisition can also turn out to be good news for Cisco's adjacent businesses, according to Blood. The increased use of videoconferencing will also drive network traffic on both local and wide area networks, which means that Cisco will be able to sell more routers and switches, Blood said.

Cisco's offer represents an 11 percent premium to the previous day closing price of Oslo-based Tandberg's stock.

The acquisition is expected to close during the first half of 2010, and is subject to customary closing conditions, including regulatory review in the U.S. and elsewhere

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