Radvision likely to seek buyer on Cisco snub; CF readies for Terra war; bid fails to wow Facet

By Cristal Cody

Tupelo, Miss., Oct. 1 - Cisco Systems, Inc. said Thursday it will pay $3 billion to buy out Norwegian video conferencing company Tandberg ASA, a deal that spurns Radvision Ltd. and places the video conferencing infrastructure company's future in jeopardy, an analyst told Prospect News.

"Maybe eventually they will find another partner or maybe someone will buy them, but it's going to be an uphill battle going forward," said Daniel Meron, an analyst with RBC Capital Markets Corp. "The former friend is becoming a foe."

Radvision likely will be shopping around for buyers in the very near term, he said.

Also on Thursday, Terra Industries Inc. didn't surprise many with its rejection of Monday's revised terms for a merger with CF Industries Holdings, Inc., which told Prospect News it is looking forward to a shareholder showdown in November.

In other situations, Facet Biotech Corp.'s board of directors on Thursday unanimously recommended that shareholders reject a $356 million hostile takeover bid by Biogen Idec Inc. The $14.50-a-share cash offer is a cheap bid that will have to be raised to secure a deal, an analyst said in an interview.

Meanwhile, Wall Street continued to fall for a second day.

The Dow Jones Industrial Average shed 203.00 points, or 2.09%, to close at 9,509.28.

The Standard & Poor's 500 index fell 27.23 points, or 2.58%, to 1,029.85, and the Nasdaq Composite index closed down 64.94 points, or 3.06%, at 2,057.48.

Cisco spurns Radvision

Cisco will launch a cash offer for shares of Tandberg at 153.50 Norwegian kroner a share, which values the company at Kr 17.2 billion. The offer represents a premium of 11% over Tandberg's closing stock price on Wednesday.

Shares of Tel Aviv, Israel-based Radvision fell $2.91, or 32.84%, to close at $5.95 on the announcement.

Cisco, which produces internet routers and other networking products, is Radvision's largest customer with 40% of sales.

"Radvision is in the process of assessing the effect of this proposed transaction on its business over the short and long term and any opportunities it may create," the company said in a statement on Thursday.

"While this news was unexpected, we are fully committed to continuing our strategy of advancing our technology leadership and providing the best price performance video solutions to our partners and marketplace," Boaz Raviv, Radvision's chief executive officer, said in the statement.

Meron, the RBC Capital analyst, told Prospect News in an interview Thursday that Cisco's acquisition of competitor Tandberg is a major blow to Radvision.

Meron downgraded Radvision to underperform and cut the stock target price to $7.00 from $10.00.

"It may take two, three or even four quarters, but eventually that partnership is going to fade," Meron said of the arrangement between Cisco and Radvision. "They may be able to offset it one way or another."

But it's going to be difficult, he said.

"It implies negatively on the sales going forward," Meron said. "It doesn't bode well for positioning. Any hope for Cisco to buy out Radvision - that's out of the question going forward. The only thing left for them is to get acquired, but that's down the road and at a lower multiple than that afforded to Tandberg."

Cisco's offer for Tandberg, which has dual headquarters in New York and Oslo, is not completely set since the deal requires antitrust approvals.

According to Tandberg, the takeover includes a $15 million termination fee payable by Cisco if the deal lapses over regulatory approvals and a $23 million fee payable by Tandberg if the board changes its recommendation on the transaction.

The deal is expected to close in the first half of 2010.

Tandberg's stock rose Kr 15.20, or 10.99%, to Kr 153.50.

Shares of San Jose, Calif.-based Cisco lost 45 cents, or 1.91%, to $23.09.

CF looks ahead to Terra meeting

Sioux City, Iowa-based fertilizer company Terra said in a statement on Thursday that its board and advisers have unanimously concluded that the "most recent version" of CF Industries' unsolicited proposal is not in the best interests of the company or investors.

"Over the last nine months, our board has reviewed five proposals from CF - and each time the board has unanimously determined that a combination of our companies lacks compelling industrial logic and runs counter to Terra's strategic objectives," Terra president and CEO Michael Bennett said in the statement.

CF Industries' latest proposal is a stock exchange offer of 0.465 of a share of CF Industries for each share of Terra, which values Terra at more than $3.5 billion. On Monday, CF Industries also said it will now require approval from Terra and CF Industries shareholders to complete the deal.

CF Industries spokesman Terry Huch told Prospect News that the Deerfield, Ill.-based company "has offered a very substantial premium and is confident the Terra stockholders will show their support by voting for CF Industries' nominees at Terra's annual meeting."

Terra will hold its shareholders meeting on Nov. 20.

"We believe that CF's proposal is not strategically attractive, and fails to appropriately value Terra either on an absolute or relative basis with CF," Henry R. Slack, chairman of Terra's board, said in the statement.

"In addition, we believe that the pending offer from Agrium creates enormous uncertainty both as to how to value CF's acquisition currency, which we believe is inflated as a result of Agrium's premium bid to acquire CF, and because we believe that CF shareholders are likely to prefer an Agrium transaction if they are given a choice," he said.

Calgary, Alta.-based agricultural company Agrium Inc. has offered to acquire CF Industries for $40.00 in cash and one Agrium share for each CF share. The tender offer is set to expire on Oct. 22.

An analyst told Prospect News that the deal is difficult to decipher because much of the value is tied to CF Industries' stock.

"It all depends on where CF's price is," the analyst said. "If CF goes down 10%, 15% in value, then the deal value goes down. It's hard to say if this is a good deal or not."

Terra shares rose 18 cents, or 0.52%, to $34.85 on Thursday.

CF Industries' stock dropped $2.03, or 2.35%, to end at $84.20.

Agrium shares shed $2.11, or 4.24%, to close at $47.68.

Facet says no thanks

Biogen launched its hostile tender offer to acquire Facet Biotech for $14.50 a share on Sept. 21. The bid represents a premium of about 64% over the $8.82-per-share closing price of Facet's stock on Sept. 3, the last trading day before Biogen announced a proposal.

The tender offer is set to expire Oct. 19.

Facet said in a statement Thursday that the offer is lower than the company's current market value and is mostly funded by its own cash and marketable and investment securities.

As of Aug. 31, Facet said it had about $364.3 million, or $14.55 a share, of cash, marketable securities, investment securities and restricted cash. The Redwood City, Calif.-based company was created in December as a spinoff from PDL BioPharma, Inc.

Biogen spokesman Jennifer Neiman told Prospect News on Thursday that "we're reviewing Facet Biotech's filing" and declined further comment.

Facet has partnered with Biogen since 2005 to develop cancer and multiple sclerosis drug treatments.

Biogen said that a merger would bring the drugs to market faster.

Facet shares were trading under cash value when Biogen made the offer, Carol Werther, an analyst with health-care investment firm Summer Street Research Partners, told Prospect News on Thursday.

"They were trading that way because people were afraid that since the market crashed a year ago, they were going to need more cash to shore up their drug [development] and in the meanwhile would just run out of money," she said.

So Biotech "made a low offer when the stock was very cheap," Werther said. "In this case, it looks like Biogen kind of lowballed them."

Cambridge, Mass.-based Biogen will have to decide whether to increase the bid or walk, she said.

The acquisition would benefit Biogen, but it's "not earth shattering," Werther said. "They have a lot of drugs. MS trials take a long time, so it would be three-plus years before they even have a result."

Facet's stock on Thursday closed up 8 cents, or 0.46%, at $17.37.

Biogen shares slipped $1.18, or 2.34%, to $49.34.

Shares of Incline Village, Nev.-based PDL fell 9 cents, or 1.17%, to $7.79.

Mentioned in this article:

Agrium Inc. NYSE: AGU

Biogen Idec Inc. Nasdaq: BIIB

CF Industries Holdings, Inc. NYSE: CF

Cisco Systems, Inc. Nasdaq: CSCO

Facet Biotech Corp. Nasdaq: FACT

PDL BioPharma, Inc. Nasdaq: PDLI

Radvision Ltd. Nasdaq: RVSN

Tandberg ASA Oslo: TAA

Terra Industries Inc. NYSE: TRA

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