Videoconferencing vendor Tandberg ASA (OSE: TAA) is strengthening its technology portfolio with the $270 million cash and stock acquisition of specialist rival Codian , the Norwegian company announced late Thursday. (See Tandberg to Buy Codian.)

Tandberg, already one of the leading players in the videoconferencing systems market with quarterly revenues approaching $150 million, appears to be paying a lot for a specialist that generated revenues of just $13 million during the first half of this year. Investors were uncertain about the move as Tandberg's stock dipped by 3 Norwegian Kroner, more than 2 percent, to NOK133.

But the acquisition, which is due to close before the end of September, will strengthen Tandberg's position in some key areas, including Telepresence, where one of Tandberg's main rivals, Cisco Systems Inc. (Nasdaq: CSCO), has been making a lot of noise. Telepresence takes videoconferencing to the next level, immersing the participants to such an extent that it feels like they're in a face-to-face meeting. (See Cisco Dials Up Videoconferencing.)

It will also give the Norwegian firm high-definition conferencing technology, which it will integrate into its existing systems, and mobile videoconferencing technology, something that Tandberg has not been developing itself. Codian, which is based in Langley, U.K., has 107 staff.

Tandberg's move comes as the IP videoconferencing market looks set to pick up. According to a recent Light Reading VOIP Services Insider report, IP Videoconferencing: Finally Ready for Take-Off, the market is already worth $800 million a year and growing, as vertical sectors, such as finance, start to embrace the technology. (See IP Videoconferencing: Picture Perfect at Last?.)

That potential growth has attracted a number of big name players. While Tandberg, Polycom Inc. (Nasdaq: PLCM), and Radvision Ltd. (Nasdaq: RVSN) are arguably the best known specialists in the market, Cisco has been joined by the likes of HP Inc. (NYSE: HPQ) and Sony Corp. (NYSE: SNE) in entering the fray.

— Ray Le Maistre, International News Editor, Light Reading