“Is a 38.3% premium fair for Tandberg shareholders? Absolutely. Does it lock in a superior return for Tandberg shareholders and protect them from future market risk? Yes. Does it also fairly reflect risks borne exclusively by Cisco shareholders? Yes.”
Cisco strongly believed that its first bid for videoconferencing equipment manufacturer Tandberg was a very good price for the company’s shareholders. The company felt as well that “no acquisition should be pursued or completed if it runs counter to the broader principles of prudence and financial fairness.” Cisco really did not want to sweeten its initial offer for Tandberg–a 38.3 percent premium over the company’s closing share price on the day before news of a possible acquisition broke.
But it did so anyway.
This morning, Cisco (CSCO) raised its bid for Tandberg to 19 billion Norwegian kroner ($3.4 billion), up from $3.0 billion. “The New Offer represents the…final price for this transaction,” Cisco said in a statement. “If the offeror does not achieve the desired level of acceptances, the offeror will withdraw the new offer and evaluate alternative ways to expand Cisco’s activities in the video communications market.”