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Cisco to buy video firm Tandberg for $3 billion
Through its latest acquisition offer, Cisco Systems is hoping to grab a bigger slice of the growing video communications market.
Cisco announced Thursday that it will offer $3 billion in cash to acquire Tandberg, a global supplier of video communications equipment.
Based in Oslo, Norway, and in New York, Tandberg provides video networking hardware and software to a wide range of companies looking for teleconferencing and telepresence systems. Tandberg's products range from low-cost desktop tools to high-end conferencing systems.
Cisco has already wet its feet in the worlds of video and telepresence. Two of Cisco's many acquisitions in the last several years--Scientific-Atlanta and Arroyo--furthered the company's grasp of this segment.
But as video becomes increasingly important to enterprise customers, the network giant wants to carve off a greater piece of the multibillion teleconferencing market by integrating Tandberg's technology with its own.
"Cisco and Tandberg have remarkably similar cultures and a shared vision to change the way the world works through collaboration and video communications technologies," Cisco CEO John Chambers said in a statement. "Collaboration is a $34 billion market and is growing rapidly--enabled by networked Web 2.0 technologies."
Once the deal is done, Tandberg CEO Fredrik Halvorsen will lead the new TelePresence Technology Group, reporting to Marthin de Beer, senior vice president of Cisco's Emerging Technologies Group. Cisco said that Tandberg's 1,500 employees will be "extremely important" in fostering growth and innovation for Cisco's video team.
Under the agreement, Cisco will launch a cash tender offer to buy all the outstanding shares of Tandberg for 153.5 Norwegian kroner ($26.45) per share, which comes to a total price of approximately $3 billion. The offer represents a 25 percent premium to the three-month average closing price for Tandberg stock. The proposal has already been unanimously recommended by Tandberg's board.
Subject to the usual regulatory scrutiny, Cisco expects the deal to close during the first half of 2010.
Lance Whitney wears a few different technology hats--journalist, Web developer, and software trainer. He's a contributing editor for Microsoft TechNet Magazine and writes for other computer publications and Web sites. You can follow Lance on Twitter at @lancewhit. Lance is a member of the CNET Blog Network, and he is not an employee of CNET. 
Basically, in the video conferencing market (all the way from desktop video to telepresence and other immersive solutions, and everything in between like plasma screens, etc.), the 2 leaders are Polycom (~40%) and Tandberg (~40%). Cisco, HP, Avaya, Nortel are all bit players in comparison.
Both Polycom and Tandberg have good interoperability with other standards based systems, which Cisco, for example, doesn?t. Cisco-Cisco works fine. Cisco-others doesn?t. That?s why they lost the ~$45m Regus account.
- by theboyr October 1, 2009 12:01 PM PDT
- I work a lot with Mitel.. and Mitel's new Audio & Web Conferencing platform combined with their TeleCollaboration product are going to be a big competitor to this. From what I've seen, it's probably a 3rd of the cost and is even more feature rich. I deal mainly with the SMB Mitel solutions, but as they start to bring the Enterprise Feature set to an affordable cost to the SMB platforms, Cisco is going to lose steam. Avaya is pretty heavily into Tandberg as well which should make this a very interesting purchase to see.
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(4 Comments)Any company in the VoIP/Video/Data markets these days are going to have to the VoIP & Video integrated into their overall solution to be competitive. Mitel and Avaya solution providers are going to gain a lot of opportunities for Video collaboration when Cisco starts pushing their mass marketing on this. In the past, we've only done a handful of Video Conferencing system, but with this I now predict I will have a lot more opportunities for HD-Video Conferencing because especially at this time...a lot of people are going to look to a solution with a much more competitive price than anyone else.