Cisco raises bid for Tandberg

US network equipment maker Cisco has raised its bid for Norwegian video conferencing equipment maker Tandberg, backed by holders of more than 40% of its shares, few of whom had warmed to its previous bid.

Cisco said it would pay 170 crowns per Tandberg share, up from its previous 153.50 crowns offer, valuing the Norwegian company at near 19 billion Norwegian crowns (USD 3.41 billion).

The sweetened bid comes after more than 90% of Tandberg shareholders snubbed Cisco's initial offer, but few analysts expected Cisco to walk away, having repeatedly touted online videoconferencing as a key growth area.

The new offer is backed by Tandberg's two largest shareholders, funds Folketrygdfondet and OppenheimerFunds, and has received acceptances from owners representing more than 40% of Tandberg stock, Cisco said. It expires on Dec. 1.

"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."

The new offer is in line with analysts' views that Cisco could raise its bid to around 160 to 170 crowns. Two analysts contacted by Reuters said the new bid price appeared fair but declined to be named.

Tandberg shares rose 4.8% to 165.10 crowns at 1006 GMT after a trading halt was lifted.

No other company has publicly shown interest in a bid, though analysts have talked of possible suitors such as Microsoft, Hewlett-Packard, International Business Machines and Avaya.

Analysts have said that regardless of whether and how the Cisco-Tandberg deal closes, it could trigger more transactions involving videoconferencing companies such as No 2 player Polycom Inc. HP also offers high-end video conferencing.