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NEW YORK (Reuters) -- Cisco Systems Inc (CSCO.O) said it plans to go ahead with its plan to buy Norway's Tandberg ASA TAA.OL, paving the way toward creating the world's leader in video conferencing equipment, although acceptances from shareholders were slightly below its target.
Cisco said about 89 percent of shareholders accepted the 19 billion Norwegian crown ($3.4 billion) deal. That was lower than the 90 percent Cisco had set as a minimum requirement, but the company said it would waive this condition.
Cisco had struggled to win over the shareholders. Its original bid was rejected by over 90 percent of Tandberg shareholders, forcing Cisco to repeatedly extend its offer deadline and raise its bid by 10 percent last month.
Cisco said it could raise its stake above 90 percent by buying more shares in the open market or through various contracts, including options and other financial instruments.
"We intend on pursuing all options available to us," company spokeswoman Kristin Carvell said in an email to Reuters.
Analysts have said that Cisco will likely eventually make Tandberg and its other video-related products work together seamlessly. That will help make Cisco's equipment -- including the routers and switches that support online communications -- indispensable to business customers.
"We think the deal makes sense," Brian White of Ticonderoga Securities said on Thursday. "If they can link it in with TelePresence it makes a lot of sense."
Tandberg is the leading videoconferencing equipment maker, filling a gap between Cisco's high-end TelePresence conferencing products and WebEx desktop video service. Tandberg holds 40 percent of the mid-tier market for videoconferencing, according to Wainhouse Research.
While Cisco repeatedly threatened to walk away, most analysts expected it to ensure the deal went through, since the leading network equipment maker has repeatedly touted videoconferencing as a key growth business.
Cisco Chief Executive John Chambers has said online videoconferencing was on the brink of wider adoption. The company estimates the total value of collaboration tools, including everything from videoconferencing to Google Apps, at around $34 billion.
High-quality, real-time videoconferencing can help cut travel costs, and Cisco says it can do more, such as helping businesses like retailers, banks and hospitals launch services from remote locations.
Cisco can pursue such ambitions because is one of the most cash-rich companies in the technology business, with $35.4 billion in cash and investments at the end of the quarter. The Tandberg deal also makes use of Cisco's cash overseas, which accounts for most of the stockpile.
Emboldened by a recovering economy and customer demands for one-stop-shop type technology services, Cisco has been expanding its product line to include networking, security and videoconferencing.
A few weeks after announcing its bid for Tandberg, Cisco said it also planned to buy advanced wireless equipment maker Starent Networks Corp STAR.O for $2.9 billion.
MORE DEALS COMING?
Analysts also have said the deal could trigger more deals in the videoconferencing space.
No rivals publicly emerged for the Tandberg deal, but analysts have said companies like Microsoft (MSFT.O), Hewlett-Packard (HPQ.N), IBM (IBM.N) and Avaya AVXX.UL could seek to add videoconferencing services.
Polycom Inc PLCM.O, the industry's No. 2 player, has been seen as a target, although its CEO told Reuters last month that it was looking to step up partnerships with companies like HP and IBM rather than pursue a buyout.
Tandberg shares closed at 163.20 crowns per share, below Cisco's final bid of 170 crowns. Cisco shares fell 4 cents on the Nasdaq to $23.83 on Thursday but were up slightly in after-hours trading.
($1=5.570 Norwegian Crown)
(Additional reporting by Deepa Seetharaman and Nick Zieminski; editing by Carol Bishopric)