U.S. communications technology firm Arrison Monday bid $1.2 billion in cash and shares to acquire Norwegian digital broadcast systems maker Tandberg Television, the two companies said.
Tandberg TV recommended shareholders accept the bid to form a company which would seek to become a leader in the market for voice, data and video systems by combining Arris's broadband network equipment know-how with Tandberg TV's digital video, compression and interactive television technology, they said.
Shares in Tandberg TV soared 11.1 % to 95.5 crowns by 0854 GMT after the announcement of Atlanta, Georgia-based Arris's friendly cash-and-stock bid at 96 crowns per Tandberg TV shares.
"Combining the resources and experience of Arris and Tandberg Television will produce a new company, unique in its ability to enable voice, video and data over any network and to any device," the companies said in a joint statement.
"The on-going industry consolidation among our key customer base creates a demand for companies that can offer an increasing scale and scope of supply on a global basis," they said.
The transaction is expected to be completed in the second quarter of 2007 and is subject to regulatory approvals and to Arris receiving acceptances of the offer from shareholders with more than 90 % of Tandberg TV shares.
The offer price consists of 80 crowns in cash and 16 crowns in Arris shares, although Arris can increase the cash portion of the offer at its discretion, the companies said.
"The 96 crown offer price represents a substantial premium of 47 % to Tandberg Television's 90 trading day average share price," Tandberg Television Chairman Jan Christian Opsahl said in the statement.
"After a diligent, thorough review, the board of directors of Tandberg Television unanimously recommends the shareholders accept the Arris offer," Tandberg TV said.
But some analysts said the offer appeared on the low side.
"Tandberg's underlying value is higher. They may have to raise the bid to gain necessary acceptance," Danske Equities analyst Hallgeir Hollup said, adding that a rival bid for Tandberg Television could also be on the cards.
Arris Chief Executive Bob Stanzione said the company would be a leader in providing digital IP infrastructure to enable voice, video and data to be delivered over integrated broadband networks from the content provider to the home.
Arris, which specializes in the design and engineering of broadband networks and voice-over IP, had revenues of $657 million over the first nine months of 2006.
Shares in Arris Group closed at $13.1 in New York on Friday, valuing the company at $1.4 billion.
Tandberg TV has more than a 25 % share of the global video processing market and its 2006 revenues are expected to be around $350 million, it said. One of its main rivals in the digital video business is U.S.- based Harmonic.