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Tandberg, the Norway-listed Videoconference business, is unlikely to face rival bids in the wake of Cisco’s NOK 153.5 per share recommended cash offer, a shareholder and sector sources told dealReporter. Tandberg has been looking for a buyer following the collapse of talks with US private equity firm Silver Lake Partners last year, said two of the sector sources.
The most likely rival bidders would be Microsoft or HP, said the sources. However, a source familiar with Microsoft said it would not bid for Tandberg. Two of the sources said HP would likely be too busy with its integration of EDS following the USD 13.9bn acquisition of the company last year. An analyst said other than HP, most industry players generally lacked the hardware distribution network Cisco possessed to make the deal work.
The two sources and the analyst ruled out the chances that Silver Lake would launch a rival bid despite rumours earlier this summer it was attempting to come back. Further, an insider indicated that talks between Tandberg and Cisco were bilateral, with Silver Lake already out of the picture. Silver Lake and spokespersons did not return calls seeking comment.
One of the sources said it was his understanding that the Silver Lake bid could not get back on track as the firm was not able to put the financing together. A second source said a bid was unlikely because Silver Lake was part of a consortium that had earlier this month bought voice and video conference business Skype.
Cisco has closed 100% of the 134 acquisitions it has announced, the insider said, noting that Cisco remains confident it could match any rival bid that would emerge.
The analyst, a shareholder and one of the sources were divided on the strength of the offer. On one side, the source said Cisco got a good price, joined by the shareholder who reasoned it was too low. However the analyst argued that it was very fair, noting that Tandberg’s share price had doubled since the end of talks with Silver Lake.
The shareholder pointed out that Tandberg’s rival Polycom was trading at an equivalent EBITDA multiple without a bid premium factored in. Polycom is trading at an enterprise value to EBITDA of 11.5 which is broadly the same as Tandberg’s EV to EBITDA of 11.7 today based on analysts’ consensus figures for their respective 2009 EBITDA.
Cisco’s offer price did not account for the enormous synergies the deal would create, added the shareholder, who asked not to be named. “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,” said the shareholder.
The shareholder also said that more than 10% (14m) of the company’s shares had traded today mostly at levels above the offer price. “Presumably those buyers are not going to vote in favour of the offer,” he said. Cisco’s offer is conditional on obtaining 90% acceptances.
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