So, in the end, they bumped. After weeks of talking tough, Cisco’s management has shown itself to be rather squeamish.
Contrary to several sternly worded statements defending the fairness of its offer for Tandberg, the US computer networking giant announced on Monday it would raise its offer from NKr153.30 per share to NKr170.
This comes after Ned Hooper, Cisco’s chief strategy officer, blogged how the initial NKr153 offer was “a good price for Tandberg shareholders”, and even hinted that Cisco could walk away.
Is a 38.3% premium fair for Tandberg shareholders? Absolutely. Does it lock in a superior return for Tandberg shareholders and protect them from future market risk? Yes. Does it also fairly reflect risks borne exclusively by Cisco shareholders? Yes.
Well evidently the answer to all these questions is now “no”.
RTRS-CISCO SYSTEMS SAYS UPS TANDBERG OFFER TO NOK 170/SHARE FROM 153.50
09:37 16Nov09 RTRS-CISCO SYSTEMS SAYS NEW OFFER “REPRESENTS FINAL PRICE” FOR TANDBERG TRANSACTION
09:38 16Nov09 RTRS-CISCO SYSTEMS SAYS NEW BID RECEIVED PRE-ACCEPTANCE FROM OWNERS OF MORE THAN 40 PCT OF TANDBERG SHRS
09:39 16Nov09 RTRS-CISCO SYSTEMS SAYS TANDBERG’S 2 LARGEST SHAREHOLDERS BACK NEW BID
Cisco will likely try to justify the move by saying it still represents good value for money for what is a highly desirable asset. Indeed, there will be Tandberg shareholders who will say the offer still doesn’t fairly value the company.
But it is hard to see how Cisco has not set itself a dangerous precedent for what is the company’s first overseas acquisition.
Moral of the story: if Cisco come ‘a knocking, gather a couple of pension funds together and scream as loud as you can. An improved offer will follow.
Related links:
Cisco-Tandberg: bump, dump, or trump? – FT Alphaville