The new offer – approximately $3.4 billion instead of about $3 billion – tickled Tandberg’s fancy. Up till now, the Norway-based company has rebuffed Cisco’s proposal as unhappy shareholders said the price was too low. But on Monday, Cisco announced the increased buyout amount; Tandberg executives say they’re pleased with the higher figure and will recommend their investors accept the deal.
Fredrik Halvorsen, Tandberg’s CEO, said Cisco’s revised offer “only further demonstrates Cisco’s belief in our technology and our people.”
However, that Cisco even raised its offer surprised investment bank UBS. Analyst Nikos Theodosopoulos said in a client memo the move could “be a bad precedent for future deals.”
“Cisco is very careful to be consistent on M&A … given the multitude of deals it has completed,” Theodosopoulos said.
Nonetheless, if Cisco does land Tandberg, the strategy will give Cisco greater reach into new markets as it competes against other large-cap tech companies such as HP. If the transaction transpires, Cisco, the world’s largest supplier of enterprise networking gear, will combine with the world’s largest videoconferencing equipment vendor.
And if, for some reason, Tandberg shareholders end up rejecting Cicso’s new bid, Theodosopoulos said Cisco “may look to acquire other video alternatives.”
UBS is maintaining its neutral rating on Cisco’s shares.
Cisco’s stock was trading at $24.04 at 2:09 p.m. Eastern, up 33 cents.