Tandberg Acquired By Arris
By Glen Dickson -- Broadcasting & Cable, 1/16/2007 10:46:00 AM
Video compression, transmission and interactive TV software vendor Tandberg Television is being acquired by Suwanee, Ga.-based broadband equipment manufacturer Arris for $1.2 billion in cash and stock, creating a significant new competitor to cable technology giants Cisco and Motorola.
Analysts are applauding the deal, which they see as a smart pairing of Arris’ IP access products, such as cable modems, with Tandberg’s video expertise. Tandberg, which is based in Norway but runs its U.S. operations from Atlanta, has steadily grown its portfolio of cable transmission equipment and entered the video-on-demand space by acquiring N2 Broadband two years ago. It also supplies MPEG-2 and MPEG-4 encoders to satellite operators and broadcasters and provides interactive TV applications to networks like NBC.
“While some pieces of the larger puzzle clearly remain, this merger creates the standout cable/video company by size and breath behind Motorola and Cisco,” said ThinkEquity analysts Anton Wahlman and Eric Kainer in a research report.
While Wahlman and Kainer do have some concerns over the valuation given to Tandberg, they say they “enthusiastically support Arris' gutsy move to create the standout ‘third force’ in cable TV and video technology.” They estimate that combined 2006 revenue for the two companies would be approximately $1.25 billion.
Likewise, Friedman, Billings, Ramsey and Co. analyst Brian Coyne describes the deal in his report as “nothing short of a strategic home run, elevating Arris from a cable-centric provider of IP access products, to a global leader in voice, video, and data solutions for cable, telco, and satellite operators, competing toe-to-toe with its biggest rivals (read: Cisco).”
The transaction is expected to be completed in Q2 2007, subject to regulatory and other customary approvals as well as the approval of Tandberg shareholders, who will receive a number of Arris shares as part of the deal. The offer price of 96 Norwegian kroners (NOK) for each outstanding share of Tandberg Television consists of NOK 80 cash and NOK 16 shares in Arris.
