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Cisco moves to wrap up $3.4B Tandberg deal

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The Associated Press

SAN JOSE, Calif. - Cisco Systems Inc. (Nasdaq: CSCO) says it is waiving its condition that 90 percent of shareholders of Norwegian videoconferencing equipment firm Tandberg ASA back its $3.4 billion takeover offer and will close the deal as soon as possible.

However, on Friday morning Cisco revealed that it has already bought up enough shares on the open market to raise its total stake above 91 percent and clinch its acquisition of the world's largest videoconferencing equipment maker.

It comes after a hard-fought takeover effort. Cisco's original offer of $3 billion attracted less than 10 percent of the company's shareholders. It was forced to raise the bid and extend the deadline for accepting before enough shareholders agreed to sell.

The buying of shares isn't the last hurdle for Cisco.

The company also said Friday that it has received a second request for information from the U.S. Department of Justice, which is looking into possible antitrust concerns arising from the deal. Cisco said it will "continue to work cooperatively" with the Justice Department in its review.

Nevertheless, Cisco said it has met the legal threshold it needs to force the remaining holdouts among Tandberg stockholders to give up their shares.

The company said it bought roughly 2.2 million Tandberg shares on Nov. 18 and Nov. 20. Combined with the 89 percent already tendered, that gives Cisco enough of a stake under Norwegian law to force the sale.

Cisco, based in San Jose, has struggled to gain shareholder approval of the deal. It sweetened the offer on Nov. 16 after its original bid of about $3 billion was approved by Tandberg's board but attracted less than 10 percent of the Norwegian company's shareholders.

When tendering the new bid, Cisco said 40 percent of Tandberg's shareholders backed the new offer, including the largest minority shareholders - Folketrygdfondet, Norway's domestic pension fund, and OppenheimerFunds.

Earlier this week, as acceptances crept up to 84 percent, the company said it would decide Thursday whether to withdraw the offer or waive the 90 percent condition. The waiver will lead to negotiations with the remaining shareholders.

Cisco has been focusing on the high end of the videoconferencing market, selling so-called "TelePresence" systems with multiple plasma screens that present life-size images of the participants to provide the illusion of face-to-face communication. With Tandberg, Cisco will get the leading maker of video systems ranging from small "videophones" to full conference-room setups.

The deal also will let the company spend some of the cash that has been piling up in its overseas subsidiaries. By buying an international company, Cisco will avoid the U.S. taxes it would have to pay to bring the money home.

Cisco employs some 4,000 people at its campus in Research Triangle Park, N.C.
 

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