Cisco’s first big overseas acquisition appears to have run into a spot of bother:
TANDBERG (TAA NO) / CISCO (CSCO US) – SEB Enskilda issues statement saying that it has been in contact with several of Tandberg’s large shareholders. Says it has communicated to Cisco that 21 shareholders, representing above 24% of the outstanding shares do not intend to tender their shares at the current offer terms.
In short, a cadre of Tandberg shareholders are looking to force Cisco to bump up its $3.2bn, or NKr153.30 a share, cash offer for the Norwegian videoconferencing company.
As the offer is dependent on Cisco gaining 90 per cent shareholder acceptance, a 24 per cent bloc of belligerent pension funds and the like is certainly weighty enough to bring the US company to the negotiating table.
Thus we are left with three possibilities:
First: Cisco could increase their offer. The refusenik shareholders have little to lose by opting to play chicken. One large institutional shareholder outside of the SEB group have indicated to FT Alphaville that they would be far happier with an offer closer to NKr170, but said NKr180 would “be pushing it”.
A north American institutional holder however has said that NKr180 was a fair price.
SEB told North Square Capital on Thursday morning that when they contacted Cisco’s advisors they expressed their “surprise” at the development, but said that the pact was “just short term holders looking to profit”.
SEB retorted that “the pact was just short term holders looking to profit but SEB said the pact is made up of long term, short term, local and international investors”.
Second: Cisco could walk away from the deal. This is unlikely. Cisco is seen to be besotted with the Norwegian teleconferencing company. Tandberg, with its market position and proprietary technology, is not an opportunity Cisco will relinquish easily.
Tandberg still looks cheap, hence Cisco’s desire to buy, and certain Tandberg shareholders’ reluctance to sell low.
Third: a counterbidder could wade into deal, but any significant competition for Cisco appears unlikely. There is simply no one out there who could compete with the US company’s wallet.
Silver Lake, the technology buy out firm, were seriously looking at Tandberg earlier this year but struggled to get financing and could never hope to joust with Cisco.
Others such as HP and Microsoft are considered by industry watchers as belonging more in the realms of theoretical possibility than reality.
So a bump seems the most likely case scenario, something the market is tentatively reflecting this morning as Tandberg shares trade around NKr1 though the terms of Cisco’s first offer.
Related link:
Cisco Systems / Tandberg – Lex
Cisco to pay $2.9bn for Starent – FT