Cisco plans to acquire Tandberg

The proposed deal, which has been endorsed by Tandberg’s board of directors, is expected to close in the first half of 2010.

The acquisition will allow Cisco to take a lead in the video conferencing sector, which has traditionally been dominated by Tandberg and its US rival Polycom.

Cisco has invested heavily in its high end telepresence offering in recent years, but lacks the lower end desktop video conferencing products necessary to help gain traction in a fast growing sector estimated to be worth $34 billion.

Cisco is also expected to benefit from Tandberg’s standards-based video conferencing technology, which is fully interoperable with standards-based equipment from rival vendors.

“This interoperability will benefit Cisco’s customers, but also competitors and partners by accelerating customer interest in video collaboration globally,” the company said in a statement.

John Chambers, CEO, Cisco cited a “shared vision” for collaboration and video conferencing technologies as one factor behind the proposed deal.

“Cisco and Tandberg have remarkably similar cultures and a shared vision to change the way the world works through collaboration and video communications technologies,” he said.

“Collaboration is a $34 billion market and is growing rapidly-enabled by networked Web 2.0 technologies. This acquisition showcases Cisco’s financial strength and ability to quickly capture key market transitions for growth,” he added.

Once the deal is complete, Tandberg’s CEO Fredrik Halvorsen is expected to lead the new ‘TelePresence Technology Group’ within Cisco, reporting to Marthin De Beer, senior vice president of the company’s Emerging Technologies Group.

Under the terms of the deal, Cisco will make a cash offer to purchase all the outstanding shares of Tandberg for 153.5 Norwegian Kroner per share, amounting to about $3.0 billion and representing an 11% premium on Wednesday’s closing price of Tandberg’s stock, and a 25.2% premium to the three-month volume weighted average closing price, Cisco said.

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