Tandberg Board Backs Ericsson Bid
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 3/7/2007
In a three-page statement issued early this morning, the Tandberg TV board recommended that its shareholders accept the Ericsson all-cash offer over Arris's rival $1.2 billion cash-and-stock bid. The board, which originally endorsed the Arris bid, said it now backs the Ericsson offer because the latter "represents a compelling opportunity for the shareholders of Tandberg Television and a superior offer compared to the offer from Arris."
Tandberg TV's board pointed out that Ericsson's offer price represents a 10 percent premium over the Arris bid. The board said the $1.4 billion offer reflects a 63 percent premium over the average closing price for Tandberg TV's shares during the 90 days preceding Arris's Jan. 15 offer.
Plus, the Tandberg TV board said Ericsson's Feb. 26 offer "does not subject Tandberg Television shareholders to the risks or potential benefits of changes in Arris' share price after completion of the transaction." In addition, the board noted that Ericsson, by already holding an 11.7 percent stake in Tandberg TV and securing pre-acceptances from another 15.7 percent of shareholders, could easily block Arris's bid because the Arris offer requires acceptance by at least 90 percent of stockholders.
Finally, Tandberg TV's board asserted that its employees support the Ericsson bid. The board said Tandberg TV employees, assured by Ericsson that it will strive to "keep their basic employment terms and conditions," believe that "both companies share a common culture of strong technical innovation and a focus on profitable growth and value creation."
The Tandberg TV board said it has notified Arris that it's withdrawn its recommendation of the earlier bid and terminated the deal. Obliged to pay an $18 million termination fee to Arris within one business day, the board said Ericsson has agreed to refund the fee if it doesn't complete its offer.
Arris officials declined comment this morning. Ericsson officials, who announced earlier today that they're extending the cash tender offer to Tandberg TV's U.S. shareholders, also declined comment.
— Alan Breznick, Site Editor, Cable Digital News