Cisco Could Waive Conditions in Protracted Bid to Acquire Tandberg

As Tandberg shareholders glacially and incrementally tender their shares at Cisco’s proposed takeover price of 170 Norwegian crowns per share, the possibility grows that Cisco could waive the requirement that it reach the 90-percent share threshold specified in the terms and conditions relating to the acquisition.

As it now stands, Cisco has received about 84 precent of Tandberg’s shares.

On Tuesday, Cisco extended its offer to December 3, and it said today that the bid would not be extended beyond that deadline. Cisco will announce Thursday whether the condition of 90-percent shareholder approval has been satisfied. If that condition goes unmet, Cisco will decide whether to waive it or to withdraw its offer for Tandberg.

The latter seems an unlikely option. Cisco has gone too far, and gone through too much trouble, to reverse course now.

Nonetheless, it’s a close call as to whether it will attain the share-tender approval of 90 percent. The closer it gets to that mark, even if it doesn’t quite hit it, the easier it will be for Cisco to waive the condition with something approaching impunity.

Getting as close to that mark as possible also would give Cisco negotiating leverage with dissident shareholders. That might become an important factor, because waiving the 90-percent requirement would entail negotiation with any holdout faction of shareholders, thus prolonging the acquisition process. If Cisco must go down that road, it will want it to be a short, paved, smooth avenue leading, at long last, to something resembling Easy Street.

So far, nothing about Cisco’s acquisition’s bid for Tandberg has been easy or smooth. Cisco misread this situation badly, and has struggled mightily to counter the objections and reservations of dissident shareholders who had a clearer understanding than Cisco of the terms and conditions surrounding a Tandberg acquisition.

Cisco has done a lot of acquisitions in its history, but most of those occurred in salubrious economic circumstances, with different M&A personnel at the helm. Also worth noting is that Cisco, even in its glory days, typically refrained from acquisitions of this size.

Moreover, the company never has done a multibillion-dollar acquisition in Europe. At the current valuation of its raised offer, Cisco will pay about $3.4 billion in its foreign cash reserves for Tandberg.

Although I’m sure Cisco has grand aspirations for Tandberg as a property that will help it develop and grow the market for pervasive videoconferencing, Cisco’s current team of M&A wheeler-dealers is unlikely to have fond memories of Norway.

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