The heady days of acquisitions are back. Cisco Systems said today it is buying Norway’s Tandberg video conferencing business for $3 billion. That’s a huge amount of money.
The deal should enhance Cisco’s own TelePresence business that sells room-sized video conferencing systems that make you feel like you’re talking to people in the same room. These systems costs hundreds of thousands of dollars each, but executives feel they help save on travel costs. Tandberg is one of the chief rivals in the business. It makes specialized software for managing the conferencing systems and managing the connections between them.
The deal could put pressure on Hewlett-Packard, which makes its own Halo video conferencing rooms. Tandberg’s purchase price is an 11 percent premium over its closing price on Wednesday. The company reported $809 million in revenue last year. In theory, video conferencing creates a lot of Internet traffic, which in turn helps Cisco’s core business of selling networking gear.
Cisco has bought 40 companies over the past five years, according to the New York Times. In the past week, merger mania has erupted, with Dell buying Perot Systems for $3.9 billion and Xerox buying ACS for $6.4 billion.