Krishna Baidya’s Random Musings

Archive for the ‘M&A’ Category

Cisco yesterday announced it is buying mobile packet core specialist Starent Networks for US$2.9 billion (US$35 per share). The price represents a premium of 21 percent over Monday’s closing share price. Founded in 2000, Starent completed an IPO in 2007 and reported revenue of US$254.1 million last year, a 74 percent improvement on the year prior, and net income of US$60.5 million. Earlier this year Starent scored a major win with US operator Verizon Wireless for deployment of LTE networks. Cisco expects the Starent deal to close in the first half of calendar year 2010. Upon completion, Starent will become the new Mobile Internet Technology Group led by Starent’s president and CEO, Ashraf Dahod, within Cisco’s Service Provider Business which is led by Pankaj Patel.

The move comes only days after Cisco announced the US$3 billion acquisition of Norwegian video conferencing specialist Tandberg. At the time, Cisco chief executive John Chambers said the firm would be “more aggressive” over the next 12 months in pursuing other acquisitions.

Cisco Systems will acquire Norway’s video conferencing equipment maker Tandberg ASA for $3 billion (17.2 billion Norwegian crowns) in cash, the companies informed on Thursday.

“Tandberg’s board of directors have unanimously decided to recommend its shareholders to accept the offer,” informed Tandberg.

The analysts had different opinions about the offer price, as some stated it fair while others said that it was too low. “This sounds like a pretty good price so I would think it will end up there. But the bid will stand for four weeks and there might be other offers,” said Martin Hoff, Analyst, Arctic Securities.

“The probability for a competing bid was low, but not impossible. From an industrial perspective, this is right for the company,” said Espen Torgersen, Analyst, Carnegie. He also added that the price was “highly acceptable”.

Tandberg’s share price rose up to 12.8 percent to a high of 156 Norwegian crowns before getting back to 154 Norwegian crowns. The shares of Cisco trading in Frankfurt were one percent lower at $23.28 (15.98 euros).

Cisco Systems informed that Fredrik Halvorsen, Chief Executive Officer, Tandberg would continue to lead the unit.