Cisco Closes $3.3B Tandberg Deal, Presses Ahead on Open Telepresence

Cisco finally succeeds in its acquisition of the video vendor while announcing a new milestone in its open source effort for telepresence interoperability.

 By Sean Michael Kerner
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Cisco now owns Tandberg -- finally.

After five months of delay, debate and extra cost, Cisco (NASDAQ:CSCO) has closed on its acquisition of Norway-based video collaboration vendor Tandberg for $3.3 billion (19 billion Norwegian kroner). According to Cisco, the Tandberg product line will be integrated with Cisco's Telepresence Technology Group while its former CEO, Fredrik Halvorsen, is joining the group as the senior vice president of the business unit.

The close of the Tandberg acquisition had been a long time coming for Cisco. The networking giant originally announced its intention to acquire Tandberg in October 2009 for $3 billion. Cisco upped its offer after running into some opposition from a group of Tandberg shareholders upset over the higher premium that Cisco agreed to pay for another acquisition, wireless networking vendor Starent. The $2.9 billion Starent acquisition came just two weeks after the Tandberg announcement and closed in December 2009.

A key hurdle that Cisco had to overcome in acquiring Tandberg was a Norwegian requirement that stipulated that 90 percent of the shares in the company needed to be purchased through such a deal. In the end, Cisco was able to acquire approximately 91.1 percent of Tandberg's shares.

Cisco's new Tandberg assets will help it as it goes after a larger piece of the expanding telepresence marketplace ,which has seen a surge in dealmaking activity since Cisco first announced its intention to acquire Tandberg. In recent months, Tandberg rival LifeSize was acquired by Logitech for $405 million, while Polycom announced a partnership with Juniper Networks to provide their own competitive alternative to the combination of Cisco and Tandberg.

Opening telepresence

While the Tandberg deal will provide new competition in the telepresence marketplace, Cisco is also working on providing interoperability among competing systems.

Earlier this year, Cisco announced the Telepresence Interoperability Protocol (TIP) as a mechanism to enable systems from different vendors to work together. To date, TIP has only been available as a licensed protocol from Cisco.

But that's now set to change. As part of the Tandberg deal closing, Cisco announced that it is expanding TIP to be an open source project.

Cisco, which said it's already licensed TIP to nine other vendors thus far, added that its plan is to publish the TIP source code libraries as open source by July 1.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

This article was originally published on Apr 19, 2010
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