Cisco Systems Inc., the world’s largest maker of networking equipment, said it won about 89 percent of shares for its 19 billion-kroner ($3.38 billion) bid for Tandberg ASA and plans to complete the acquisition.

Under Norwegian law, Cisco needed more than 90 percent of the shares to gain complete control of Tandberg. Cisco plans to buy the remaining stock on the open market and acquire options or other contracts for Tandberg shares, said Terry Alberstein, a spokesman for San Jose, California-based company.

Tandberg, the second-biggest maker of videoconferencing equipment, would let Cisco offer lower-cost products in that market. Cisco sells telepresence systems -- videoconferencing rooms with life-sized images of callers -- which can cost $300,000. Lysaker, Norway-based Tandberg would give Cisco a bigger chunk of the so-called collaboration market, which Chief Executive Officer John Chambers pegs at about $34 billion.

“They view video as paramount to their product roadmap, and Tandberg is certainly a strong fit,” said Erik Suppiger, an analyst with Signal Hill Capital Group LLC in San Francisco. He rates the shares “hold” and doesn’t own them.

Cisco has bought more than 130 companies in its 25-year history, and Tandberg is the company’s first acquisition outside the U.S. Cisco reported $35.4 billion in cash at the end of its first quarter, with all but $4.7 billion of that outside the U.S.

“A key factor in Cisco’s decision to pursue Tandberg is it’s a productive use of their offshore cash,” Suppiger said. “Doing an acquisition like this helps avoid using up their domestic cash.”

Pursuing All Options

Cisco raised its bid by 11 percent to 170 kroner a share last month after shareholders rejected an earlier offer as too little. The company can buy remaining shares on the open market “to the extent permitted by law,” Alberstein said. “We intend on pursuing all options available to us,” he said.

Cisco lost 4 cents to $23.83 yesterday on the Nasdaq Stock Market. The shares have gained 46 percent this year. Tandberg fell 1.1 percent to 163.2 kroner in Oslo. The stock traded at 138.3 kroner on Sept. 30, before the bid.

Tandberg ranks second to Pleasanton, California-based Polycom Inc. in videoconferencing sales. The company reported third-quarter operating income of $50 million on sales of $234.7 million. Polycom reported operating income of $23.4 million on sales of $243 million in the quarter.

Cisco announced the acquisition on Oct. 1, offering 153.50 kroner a share in cash for Tandberg. The bid failed to entice investors -- Swedish bank SEB Enskilda said that month that shareholders owning more than 24 percent of the shares didn’t want to sell.

Folketrygdfondet, Norway’s domestic pension fund and Tandberg’s largest shareholder with a 10.1 percent stake, had said it would accept the new offer, as did Norwegian funds Storebrand Kapitalforvaltning and Statoils Pensjon.

The acquisition is expected to close in the first half, Cisco said.

 source:bloomberg