Although I doubt a rival bidder will attempt to wrestle Cisco Systems for the ultimate ownership of Tandberg, I think the networking giant will graciously but grudgingly acquiesce to the dissident Tandberg shareholders who want Cisco to pay a higher premium for the Norway-based videoconferencing-systems vendor.
How much higher than the standing $3-billion offer will Cisco have to go to capture 90-percent approval from Tandberg’s shareholders by November 9, the date on or before which the transaction must go through?
My guess is that Cisco won’t have to boost the offer all that much. It won’t, for example, have to raise the bid by another billion dollars. It might end up paying another $400 million, give or take $100 million drawn from Cisco’s gigantic foreign cash reserves, which accounted for $29 billion of its $35-billion cash hoard as of the beginning of October.
What you ought to bear in mind is that the recalcitrant Tandberg shareholders are under a lot of pressure to meet Cisco halfway. Tandberg’s board members unanimously endorsed the Cisco takeover proposal, and it doesn’t appear that a “white knight” acquirer is waiting backstage to make a dramatic late entrance. The restive Tandberg shareholders have a little leverage — Cisco really wants this deal to happen, as it provides valuable synergies for a Cisco telepresence product portfolio that has been decidedly top heavy — but they don’t want to overplay their hand.
At the end of the day, cooler heads will prevail on both sides of the divide. Cisco will offer a bit more of its prodigious foreign cash, and enough of the refusenik Tandberg shareholders will respond favorably to the sweetened bid to get the deal done.