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UPDATE: Cisco Extends Deadline To Tandberg Shareholders

(Updates with additional background, comment from Cisco)

By Roger Cheng

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Cisco Systems Inc. (CSCO), unable to sway all of Tandberg ASA's (TAA.OS) shareholders with its $3.03 billion offer for the video conferencing company, on Monday extended the deadline in an effort to lure the remaining hold-outs seeking a richer bid.

The San Jose networking titan has maintained that it is offering a "full and fair" price for Tandberg, based in Norway. But a minority group of Tandberg shareholders have complained the price is too low. Cisco's deal values Tandberg at 153.50 Norwegian kroner per share; Tandberg shareholder Panta Capital told Dow Jones Newswires last week that an acceptable bid price would be at least NOK170.

The offer period, which was expected to expire Monday, was extended to Nov. 18. All terms and conditions remain in place, according to Cisco. The company wanted to buy up all of the shares, but had a 90% "threshold" that likely wasn't met.

In early October, Cisco offered to buy the video-conferencing-equipment maker in a deal that values the company at around 17.2 billion Norwegian kroner ($3.08 billion). The offer represents an 11% premium to Tandberg's share price Sept. 30 and a 38% premium to the price on July 15 before reports emerged about an upcoming bid. Tandberg's board and management also support the deal.

But investment firm Panta Capital and advisory firm Scott & Associates AG said in an open letter that the current offer doesn't adequately reflect Tandberg's operational performance or the valuation of its peers.

Last week, Cisco reported its fiscal first-quarter profit dropped 19% as lower sales offset improved margins, and the company noted strong sequential trends and that the economic outlook has improved. Against a backdrop of greater merger activity, Cisco also agreed to acquire Starent Networks Corp. (STAR) last month.

Cisco Chief Executive John Chambers reiterated to analysts that the offer was fair, and noted that he would be willing to walk away from any deals if the price was no longer attractive.

"Cisco's general approach to M&A activities is that no acquisition should be pursued or completed if it runs counter to the broader principles of prudence and financial fairness," a Cisco spokeswoman said Monday.

Tandberg plays into the company's burgeoning video conferencing business, which is one of the 30 new business areas that Chambers most often talks about. The company has been acquiring businesses to augment those new ventures.

Earlier Monday, Cisco said it as offering a three-part bond deal worth at least $1 billion, which it intends to use for general corporate purposes. The company has $10.3 billion in long-term debt as of July, according to a filing with the Securities and Exchange Commission.

Cisco shares fell 0.1% to $23.80.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com

(Gustav Sandstrom, Romy Varghese, Prabha Natarajan, and John Kell contributed to this report.)

  (END) Dow Jones Newswires
  11-09-091239ET
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