Original URL: http://www.theregister.co.uk/2009/11/03/cisco_tandberg_china/
Cisco plays hardball over Tandberg buy
But snaffles Chinese TV box business in the meantime
Posted in Data Networking, 3rd November 2009 13:02 GMT
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Cisco is warning shareholders of Tandberg - the video conferencing firm it is buying for $3bn - that it will not pursue the takeover at any price.
Last month some large shareholders made noises that Cisco's offer for the firm was too small - despite offering a 38 per cent premium.
Cisco issued a tough statement warning: "no acquisition should be pursued or completed if it runs counter to the broader principles of prudence and financial fairness."
The release notes that the deal offered a 38 per cent premium on Tandberg's share price and a 102 per cent return on the year.
Ned Hooper - corporate development VP at Cisco - said the deal was Cisco's first purchase of a European listed company. As such, the price reflected risks of currency movements and the complexity of integrating disparate engineering and sales teams.
Hooper added [1] that the collaboration market was currently worth $34bn a year and was primarily based on voice. Cisco believes this will shift to video but will require serious investment and innovation.
In other news, Cisco has bought the set-top business of DVN, a big Chinese digital cable TV company. Cisco is paying $44.5m for the company - $17.5m immediately, and $27m over four years assuming sales targets are hit.
The Chinese government wants everyone on digital TV by 2015, so there is a big market for the winning box maker. Cisco's statement is here. [2] ®