Cisco responds to 'walk-away' tactic speculation

Cisco's Chief Strategy Officer, Ned Hooper wrote a blog post to inject some Cisco feedback into the TANDBERG acquisition rumor mill. Was the move a scare tactic to get investors to give in or was it just a savvy decision made on a risk vs. reward basis? According to the blog post, Cisco's initial offer took many things into account that a raised bid would disregard.

Cisco's current bid that TANDBERG investors have rejected took into account the value of the merger, but also "the risks, from capturing synergies and executing on our first ever acquisition of a European public company, to the overall integration complexity associated with engineering and sales spread across both Norway and the UK, are also important," claimed Hooper. Increasing the bid would begin to disregard this risk analysis.

Hooper asked and answered readers about the fairness of the original bid saying "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."

The post did not say whether the move was a bluff or whether this really was Cisco's final offer, but the post went to lengths to explain why Cisco has threatened to walk while also pointing out the reasons they disagree with the TANDBERG investors currently blocking the merger. Basically Cisco's stance is that they will behave fiscally prudent for their investors and if the TANDBERG purchase fails to make financial sense, Cisco would have no choice but to look elsewhere to complete their video offerings.

For more:
- read this blog post

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