Cites "healthy" premium but another shareholder tries to block deal
Cisco executives this week expressed optimism that it will close the deal with videoconferencing leader Tandberg. Cisco’s $3 billion offer is facing resistance from a block of shareholders owning 24% of the company, and now OppenheimerFunds, which represents accounts holding another 6%.
Cisco needs 90% of shareholders to approve the deal before it goes through. Cisco executives speaking during the company’s first quarter conference call are confident they can get it done — without overpaying for Tandberg.
“I believe that we will get this transaction closed,” CEO John Chambers said. “But at the same time…we have already walked away from a couple of deals this year where we could not get the right pricing.”
Chambers added that Cisco’s 38% premium on Tandberg’s stock is “healthy.” Ned Hooper, Cisco’s senior vice president for Corporate Development and Consumer groups, says shareholders can double their money in a year.
“We feel that it is a very sound offer, a very fair offer,” Hooper said during the quarterly conference call. “It generates…over 100% 12-month return for their shareholders and we expect to continue to work with shareholders to get this transaction closed.”
Cisco also made no bones about how strategically it viewed Tandberg to its overall “video is the killer app” mentality.
“We view TelePresence at the high-end to be extremely effective for Cisco and make no mistake about it, we have caught the imagination of both enterprise leaders and service provider leaders on what this can mean,” Chambers said during the call. “Where we were missing was at the mid-level and at the desktop level and some of the open architectures, so they are a perfect match for us.”
But not, apparently, for 30% of Tandberg’s shareholders. Will Cisco get this deal done? Will it do so without hiking its offer?
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