SCENARIOS-Cisco's options, as Tandberg bid faces opposition

By Ritsuko Ando and Quentin Webb

NEW YORK/LONDON, Nov 6 (Reuters) - U.S. network equipment maker Cisco Systems Inc (CSCO.O) faces a touch choice as the Monday deadline approaches for its $3 billion tender offer for Norwegian video conferencing company Tandberg ASA (TAA.OL).

Investors holding about 30 percent of Tandberg's shares have demanded a higher price than the 153.50 crowns ($26.93) per share that Cisco offered, which presumably means that the U.S. company will not get the 90 percent shareholder approval that it would need to close the acquisition.

Click on [ID:nL3595357] for a Reuters poll of 14 analysts, of whom 12 believed the current offer would not win 90 percent approval.

Here are some possible scenarios for Cisco:

EXTEND OFFER AT CURRENT PRICE

The one-month tender offer expires Nov. 9 at 1730 CET (1630 GMT). Cisco could extend the deadline and continue to negotiate with shareholders for a maximum of 10 weeks, or until mid-December.

If Cisco extended without changing the terms, and Tandberg shares and the overall market fell, some investors might reconsider their resistance, analysts say. However, Most expect an extended offer would lead to a higher bid.

RAISE BID

Many analysts expect Cisco to raise its offer, or sweeten the bid in some way, because the company has said that online video communications will be a key growth area.

Peter Germonpre of Panta Capital, a small London firm advising on merger arbitrage, told Reuters a fair value would be at least 170 Norwegian crowns. [ID:nL6717543] Tandberg shares closed flat at 151.00 Norwegian crowns on Friday.

"We believe Cisco will go the extra mile to complete the deal due to Tandberg's vital role in Cisco's collaboration strategy," said Danske Markets Equities analyst Martin Stenshall.

He sees "a greater probability, a 75 percent likelihood, that Cisco will increase its bid, rather than walk away from the deal, a 25 percent likelihood."

WALK AWAY

Some analysts, however, said that raising the bid could set a bad precedent for Cisco, particularly as it has said it expects to buy more companies to further diversify its business from the routers and switches that direct Web traffic.

Cisco Chief Executive John Chambers said earlier this week that he believes the Tandberg deal will be closed, but he also threatened to drop the offer.