Cisco has upped its offer for videoconferencing leader Tandberg to $3.4 billion from $3 billion to appease a skittish bloc of shareholders who felt the inital offer undervalued the company. Cisco has also extended the offer deadline to Dec. 1 from Nov. 18, according to this report form the IDG News Service, and said the new price was its final offer.
Last Monday, less than 10% of Tandberg shareholders had tendered their shares. But with the new offer, another 30% of shareholders accepted and now Cisco holds about 40% of the company, IDG News Service's Mikael Ricknäs reports.
Cisco still needs 90% acceptance for the deal to go through, however.
Cisco made its initial $3 billion offer for the company on Oct. 1. But two groups of shareholders respresenting a 30% stake in the company rejected the offer as too low. And two investment firms filed an open letter to Cisco executives lobbying for a higher offer.
Some analysts thought Cisco would not raise its offer citing the precedent it would set for other M&A activity. But the strategic rationale for acquiring Tandberg -- 40% share of the videoconferencing market, product breadth in the low-end and mid-range, and Cisco's view that video will drive future network upgrades -- was too vital to risk.
States UBS analyst Nikos Theodosopoulos in a bulletin and the increased offer:
We thought Cisco would not raise its offer price given it would be a bad precedent for future deals...we believe valuation has played a less relevant role versus strategic rationale for the announced acquisition offers, given expansion into new markets and the more competitive landscape with other large cap technology companies such as HP.
Cisco also says Tandberg and videoconferencing will help better position Cisco in the $30 billion collaboration market.
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