Tandberg TV Board Backs Ericsson Bid3/09/2007 7:00 PM Eastern
Tandberg Television’s board of directors unanimously recommended to shareholders that they accept Ericsson’s unsolicited bid worth $1.4 billion — effectively shutting the door on Arris Group’s chances of picking up the video-processing equipment maker.
Ericsson on Feb. 26 offered 106 Norwegian kroner ($17.08) per share of Tandberg, 10% higher than a cash-and-stock bid worth 96 kroner per share ($15.47) from Arris.
“It is the directors’ opinion that Ericsson’s offer represents a compelling opportunity for the shareholders of Tandberg Television and a superior offer compared to the offer from Arris,” the Tandberg board said in a statement.
The board noted that “Ericsson’s offer does not subject Tandberg Television shareholders to the risks or potential benefits of changes in Arris’ share price after completion of the transaction.”
|The Fight for Tandberg TV|
|Source: Multichannel News research
|Jan. 15, 2007: Arris announces plans to acquire Tandberg Television for $1.2B in cash and stock|
|Feb. 15: Arris formally extends offer to Tandberg shareholders|
|Feb. 25: Ericsson informs Tandberg CEO Eric Cooney and chairman Jan Christian Opsahl of its intention to announce a takeover bid|
|Feb. 26: Ericsson announces all-cash offer for Tandberg worth $1.4B|
|March 7: Tandberg’s board recommends accepting Ericsson bid|
Arris director of media relations Alex Swan said the company had no comment beyond its earlier statement that it was “assessing its options,” in light of the Ericsson bid.
Wall Street analysts pronounced the Arris offer dead as soon as Ericsson stepped into the arena.
ThinkEquity Partners analyst Anton Wahlman, in a Feb. 26 research note, said he expects Arris to “refocus on other potential merger opportunities,” including C-COR, Harmonic or Terayon Communication Systems.
“Clearly, valuations in this space are going up with numerous acquisitions occurring in the last 12-18 months in particular, seemingly at an accelerated pace,” Wahlman wrote.
For Ericsson, Tandberg represents a big stepping stone into the fast-growing Internet Protocol TV market, said Infonetics Research analyst Jeff Heynen. “It would certainly help Ericsson transform itself into a major end-to-end wireline and wireless video network infrastructure player,” he said.
Tandberg’s board had earlier recommended the Arris deal, which “delivered the highest value to Tandberg Television’s shareholders at that time,” the board said.
Tandberg said it notified Arris that it has withdrawn its recommendation that shareholders accept the Arris bid and said it would pay an $18 million breakup fee to Arris by March 8.
Ericsson said Tandberg, which has 870 employees, would become a wholly owned subsidiary once the deal was completed. Tandberg, with U.S. operations in Duluth, Ga., sells its gear to cable, telco and satellite-service providers, including DirecTV, British Telecom and NTL in the United Kingdom, China Telecom, Swisscom and Intelsat.
The deal isn’t officially sealed yet. Ericsson’s offer still must be approved by regulatory bodies, as well as shareholders who own more than 90% of the voting shares of Tandberg.
Ericsson has acquired an 11.7% stake in Tandberg and also said it has agreements from holders of another 13% that they will accept the Ericsson bid.
In its statement last week, Tandberg’s board pointed out that Ericsson’s ownership stake would prevent the 90% acceptance condition to the Arris offer unless Ericsson were to sell its stake or support the Arris offer.