Internet protocol television (IPTV) is seen as a big future money-spinner for telecoms firms

Ericsson Bids $1.4B for Tandberg TV, Tops Arris

STOCKHOLM—Telecom equipment maker Ericsson on Monday offered 9.8 billion crowns ($1.38 billion) cash for Norway's Tandberg Television, topping an earlier accepted bid from Arris Group.

Ericsson, which in December paid $2.1 billion for network equipment vendor Redback, said it was bidding 106 Norwegian crowns ($17.23) for each Tandberg share.

The offer represents an 18.2 percent premium to Tandberg's volume-weighted average price over the last three months and is 10.4 percent above the 96 crowns offered by Arris, a U.S. communications technology company.

Analysts had long expected a counter-bid for Tandberg TV, saying the company had a strong foothold in a market revved up by fast-growing bandwidth and demand for television systems.

Shares in Tandberg, which offers a range of video and TV services over the Internet, shot up 11.5 percent to 111.75 crowns by 1235 GMT.

Ericsson shares were 0.6 percent higher at 26.05 crowns.

Paul Handeland, analyst at ABG Sundal Collier in Oslo, said Ericsson's deep pockets would probably scare off Arris, but that other systems operators, such as German giant Siemens or France's Alcatel-Lucent, may be interested.

"Tandberg TV is trading above the bid price due to market belief in either a bumped-up bid by Ericsson or a potential competing bid ... possibly from the likes of Siemens or Alcatel-Lucent," Handeland said.

Ericsson said it had bought 11.7 percent of Tandberg shares and that owners of another 13 percent had signed on to its bid.

Swedish holding company Industrivarden said it sold its 7.4 percent stake in Tandberg to Ericsson, while Norwegian conglomerate Orkla sold it a 3-4 percent stake.

"IPTV for cable and telecom operators is the biggest networked multimedia opportunity going forward," Ericsson Chief Executive Carl-Henric Svanberg said in a statement.

"Ericsson and Tandberg Television is a strong combination with a unique ability to offer complete IPTV solutions."

Tandberg had revenues of $350 million in 2006 and made an operating profit of $56 million.

"Strategically it is sensible, and raising exposure to the IPTV segment is something they have talked about," said one analyst, who added that the price was reasonable.

In mid-January, Arris bid $1.2 billion in cash and stock—or 96 crowns per share—for Tandberg, an offer that Tandberg TV's board recommended to shareholders.

Tandberg said it would review Ericsson's offer. Its Chief Financial Officer, Fraser Park, declined to say if he thought the Ericsson bid was friendly or hostile, but said the company would maintain contact with Arris.