Published: Thursday, 15 Oct 2009 | 10:52 AM ET

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Investors holding 24 percent of shares in videoconferencing group Tandberg snubbed a $3 billion bid from Cisco Systems, raising prospects of a higher offer from the U.S. network equipment maker.

"We think the price is too low," said Amund Lunde, chief executive of life insurance group Oslo Pensjonsforsikring, a shareholder with 1 percent of Tandberg's stock and among the group of shareholders that have turned Cisco

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He declined to suggest a price the group might accept.

Cisco, which needs acceptances from holders of at least 90 percent of Tandberg stock to fully acquire the company, made its 153.50 crowns per share move for the Norwegian company in October in a bid to dominate the fast-growing corporate video communications market.

Tandberg's board recommended the cash offer.

A Norwegian analyst said it was "not unthinkable" Cisco — which analysts say might opt to acquire a smaller stake in Tandberg if complete control proves impossible — could now raise the bid to 170 crowns.

But there were few signs in the market of bets on a higher offer as Tandberg shares crept 1.1 percent higher to trade just above the offer price at 154.30 crowns.

The main Oslo index was up 0.2 percent.

One banker noted Nordic shareholders have succeeded several times in recent years in wringing better terms out of suitors.

Norway's Tandberg Television was acquired in 2007 after Ericsson trumped a bid from Arris Group, while Swedish hospitals and healthcare company Capio was acquired in 2006 after a private equity group lifted an original offer by 9 percent.

Conglomerate Orkla, which holds 2.2 percent of Tandberg's stock and has been seen as an activist shareholder in Norway, declined to say if it was part of the shareholder group or give comments on the bid.

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The one-month tender period for Tandberg shareholders began on Oct. 9 and In a statement rejecting the offer, brokerage SEB Enskilda said: "On behalf of 21 shareholders representing above 24 percent of the outstanding shares in Tandberg, SEB Enskilda has ... communicated to Cisco that these shareholders do not intend to tender their shares at the current offer terms."

It said the shareholders were convinced Tandberg will generate strong returns as an independent company, though they wee open to evaluating a higher offer from Cisco or a third party.

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"We are aware of statements made by Tandberg shareholders and as we are currently in the middle of a tender offer process, we are not able to comment," said a spokeswoman for Cisco. Cisco's offer values Tandberg at about 23 times next year's projected earnings, slightly above U.S. rival Polycom's multiple of 21.7.

Some analysts pointed to Cisco's recent plans to acquire wireless equipment maker Starent Networks at almost 40 times Starent's 2010 earnings estimates, a multiple Cisco has not paid since it bought WebEx in 2007.

"We believe it is not unthinkable that Cisco will pay up to 170 crowns per share," said Fredrik Thoresen in DnB NOR Markets. However, analyst Tore Tonseth in Argo Securities said he expected a large majority of Tandberg shareholders would accept Cisco's offer as it valued Tandberg at a fair price.

"One needs to be prudent when calculating how many synergies existing shareholders can reap out of Cisco," Tonseth said, adding Tandberg shares could drop to 120-130 crowns if Cisco walked away.

Tandberg was due to report third-quarter figures after the market close on Thursday.

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