Cisco’s Pointless Procrastination in Tandberg Deal

Cisco continues to behave curiously in its ambivalent takeover bid for videoconferencing-systems vendor Tandberg.

Cisco announced yesterday that it would extend its current $3-billion offer, valued at 153.50 Norwegian kroner per Tandberg share, until 5:30 pm CET (1630 GMT) on November 18. If, by that time, Cisco has not received tenders for 90 percent of Tandberg’s shares, the deal cannot proceed and Cisco will have to make its next move. Cisco has said repeatedly that it might just step away from the table and abandon the deal.

As of today, Tandberg stockholders have tendered only about 9.3 percent of the Norwegian company’s shares to Cisco at terms pursuant to the existing offer. That means more than 90 percent of Tandberg shareholders are holding back. A bloc in possession of about 30 percent of Tandberg’s shares is steadfastly opposed to the deal. That group has asked Cisco to produce a sweetened bid of at least 170 kroner per share.

Considering the arithmetic and the entrenched group dynamics, Cisco must know that the existing proposal will not win the necessary approval in the next eight days. A monkey with an abacus could figure that out.

All of which leads to an obvious question: Why has Cisco chosen to wait another eight days before it takes action? I’m not seeing method in the madness. What I am seeing is muddle.

Dissident Tandberg shareholders will hold their ground, demanding a higher bid from Cisco. There are enough of those naysayers to torpedo the acquisition at the proposed price. Cisco can either raise the bid enough to get the deal done, even though the precedent of doing so is unappealing, or it can walk away and forget about it.

Extending the current offer seems pointless. It gives the appearance that Cisco isn’t sure what to do, that it got caught off guard by everything that has happened since it announced the proposed acquisition early last month. If that’s true, Cisco has nobody but itself to blame.

Before it made this offer, it should have known whether it had the necessary support among Tandberg shareholders to close the deal. It’s baffling that Cisco staggered down this cul de sac, and it is even more astounding that it can’t find its way out.

Nothing is likely to change in the next week, and letting this stalled deal twist in the wind indefinitely will help neither Cisco nor Tandberg.

Cisco should realize that Tandberg is based in Norway, nor Denmark. Hamlet might have procrastinated in these circumstances, but Cisco should know whether it wishes to buy or not to buy.

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