The first hurdle to Cisco’s proposed acquisition of Tandberg appears to have been cleared—earlier today Cisco announced that it now controls 90% of the shares in Tandberg. Cisco received acceptances representing 89.1% of the outstanding shares and purchased an additional 2% of the outstanding shares in November, resulting in control of 91.1% of the shares and voting rights in Tandberg. The process to clear this initial hurdle took slightly less than 60 days from when Cisco’s original acquisition bid was presented to Tandberg shareholders and will cost Cisco $3.4 billion, an increase from its initial offer of $3.0 billion. The remaining hurdles include the satisfaction or waiver of the remaining conditions to the offer through the Oslo Stock Exchange and approval from the U.S. Department of Justice.
The effect on the videoconferencing market and Cisco’s market share will parallel that following Cisco’s acquisition of WebEx in early 2007 for $3.2 billion. The acquisition of WebEx vaulted Cisco into the collaboration market and positioned Cisco as the market leader overnight. The successful acquisition of Tandberg will similarly position Cisco as a global market leader in videoconferencing, significantly augmenting its current market position developed over the past several years with its own high-end telepresence solutions and high-definition room-based videoconferencing systems.
I anticipate Cisco will quickly add integrated capabilities between its Unified Communications Manager and WebEx applications with the Tandberg videoconferencing product lines to facilitate pull-through and refresh system opportunities. With this acquisition, Cisco has improved its overall market position in the unified communications and collaboration markets (these are rapidly blending together) and has created another strong product basis to successfully cross-position with other elements of its portfolio. In terms of the chess-match between Cisco and Microsoft for leadership in the UC market ... advantage Cisco.
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