Displeased Tandberg Shareholders Face Hobson’s Choice on Cisco Deal

The deal is unlikely to be derailed because of it, but not all Tandberg shareholders are enamored of the $3-billion all-cash offer Cisco made for the Norwegian videoconferencing-systems company.

In a Financial Times column earlier this week, a Tandberg shareholder noted that Polycom, Tandberg’s videoconferencing-systems rival, was trading at an equivalent EBITDA multiple. He or she reasoned that a takeover-bid premium should apply to Tandberg’s value.

The anonymous shareholder also argued that Cisco’s acquisition offer did not account for the valuable synergies that will flow from the merger. Said the deal critic:

“Tandberg claimed the deal would lead to USD 10bn of revenues in 10 years which is twice the amount the company would achieve on a standalone basis.”

Finally, and potentially disconcertingly for Cisco, the shareholder pointed out that more than 10 percent of the company’s shares have traded above the offer price since the deal was announced. Not unreasonably, the anonymous shareholder contends, new buyers of Tandberg paper will be reluctant to vote in favor of Cisco’s offer. The Cisco acquisition is conditional on an acceptance rate of 90 percent of shares.

Even with a degree of restiveness in the ranks of Tandberg shareholders, Cisco has reason to remain confident the deal will go through. That’s because, as mentioned in the Financial Times piece and elsewhere, Tandberg is unlikely to receive a better offer.

Other potential acquirers, such as Microsoft and HP, are focused elsewhere at the moment. Silver Lake Partners, the private-equity firm that had been in abortive discussions to acquire Tandberg last year, is no longer in the picture, choosing to participate in the contentious Skype deal instead.

Unimpressed with the Cisco offer, dissident Tandberg shareholders have no recourse to other options. It’s a case of Hobson’s choice.

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