Cisco Systems raised its offer for Tandberg on Monday in an effort to overcome complaints from the Norwegian teleconferencing company’s shareholders that its initial offer was not enough.Cisco, the leading maker of networking equipment, increased its offer to NKr170 a share, or about $3.4bn, from the previous level of NKr153.5, or $3bn. Cisco said it would extend the offer period to December 1 and that the revised deal was its “final price”.Holders of 9.4 per cent of Tandberg shares had committed to accepting the previous offer, made with the endorsement of the Tandberg board on November 10. Investors holding 24 per cent of the shares had publicly rejected it, more than enough to veto the transaction under Norwegian law, which requires 90 per cent approval.Cisco said it had support at the new price from shareholders with a combined stake of 40 per cent of Tandberg, including big holders Folketrygdfondet and OppenheimerFunds.“Cisco believes that this revised offer remains consistent with the
principles of prudence and financial fairness,” Cisco said. “If Cisco does not achieve the desired level of acceptances, the company will withdraw the offer and evaluate alternative ways to expand our activities in the video communications market.”The price increase is relatively modest given the poor support at the initial bid level. The Oslo Pension Fund and other holders had complained that the first overture was only an 11 per cent premium from the closing price before Cisco made that offer public. They said it valued Tandberg at 23 times next year’s projected earnings, less than the well-capitalised Cisco has paid for other targets.The dissident shareholders had communicated their opposition through Swedish brokerage ESB Enskilda. The brokerage had no immediate comment on the developments on Monday.Cisco has met with institutional investors and stressed that its early offer was a 38 per cent premium above Tandberg’s trading price in the summer, before speculation about a takeover bid reached the
press.The new NKr170 price matches the bullish target for the stock that had been set by Peder Strand, ESB analyst.If Cisco wins support at the new price from a majority of Tandberg investors, that could help put pressure on the opponents to agree, people involved in the process said.Strategically, Tandberg would help Cisco expand its video services in the midmarket. The company already has one of the most sophisticated offerings with Cisco TelePresence, which fills conference rooms with virtual seating, and the popular low-end collaboration service WebEx.