Cisco snaps up Norwegian video conferencing business for 2bn

NETWORKING giant Cisco Systems yesterday said it would use its huge cash pile to buy Norwegian rival Tandberg for 17.2bn kroner (&pound;1.9bn) in a bid to grow its video conferencing business.<br /><br />Cisco currently specialises in up-market video conferencing, using specialised suites with huge plasma screens that allow executives to have life-like business meetings.<br /><br />But it is hoping that the 153.50 kroner-a-share takeover of Tandberg, which is an 11 per cent premium on the firm&rsquo;s pre-deal share price, will give it access to middle market video conferencing customers.<br /><br />Analysts say that the video conferencing market, currently worth just $1.5bn (&pound;940m), will grow rapidly in the coming years as recession-hit businesses cut back on foreign travel.<br /><br />Cisco is using its massive $35bn cash pile to fund the deal, which could be the first of many overseas acquisitions. Around half its cash is sitting overseas, and by snapping up foreign firms it can avoid paying tax to move it back on US shores.<br /><br />John Chambers, Cisco chief executive, said he expects the deal to close in the first half of next year and to add to earnings by fiscal 2011.<br /><br />Shares in Israeli video conferencing firm Radvision, which gets 40 per cent of its revenues from Cisco, fell by 37 per cent on news of the deal after analysts said Cisco would probably end the partnership.