Oct. 30 (Bloomberg) -- Cisco Systems Inc. may drop its 17.2 billion-krone ($3.04 billion) offer for Tandberg ASA as shareholders owning 24 percent of the Norwegian company press for a higher offer, said a person familiar with the transaction.

If Cisco is unable to get investors with 90 percent of Tandberg to approve its 153.50 kroner-a-share offer, it would strongly consider walking away, said the person who declined to be identified. Investors have until Nov. 9 to accept the offer.

“I think it’s quite unlikely that they’ll drop their offer, everything points to them buying Tandberg,” said Martin Hoff, an Arctic Securities ASA analyst with a “buy” rating on the stock. “It’s probably smart of them to send some signals to scare the shareholders into accepting the offer.”

Cisco, the world’s largest maker of networking equipment, made its bid for Tandberg on Oct. 1 to expand its videoconferencing business. SEB AB’s SEB Enskilda unit in Norway canvassed shareholders and found 21 owners who wouldn’t sell “at the current offer terms,” according to an Oct. 15 statement issued by the bank.

Tandberg, the world’s second-largest maker of videoconferencing equipment by sales, fell as much as 10.5 kroner, or 6.7 percent, today before its shares were halted by the Oslo stock exchange. The shares closed 1.8 percent lower at 153.7 kroner. Cisco fell 3 percent to $22.81 at 4 p.m. New York time on the Nasdaq Stock Market. Tandberg’s larger rival Polycom Inc. fell 20 cents to $21.47.

‘Higher Bid’

Polycom’s performance suggests that Tandberg is worth more, some investors said.

“We’d frankly like to see Cisco pay more for it,” James Moffett, who helps manage $4.5 billion including Tandberg and Cisco shares at Scout International Fund in Kansas City, said on Oct. 28. “Tandberg has a slightly higher multiple than Polycom but their sales growth and profitability are better.”

Tandberg posted third-quarter operating income of $50 million on sales of $234.7 million. Polycom’s operating income in the period was $23.40 million on sales of $243 million.

Tandberg’s board backed the offer and Cisco said it would make Tandberg Chief Executive Officer Fredrik Halvorsen the head of an expanded videoconferencing division. Tandberg’s Geir Olsen declined to comment today.

“We are currently in the middle of a tender-offer process, we are not able to comment,” Ashley Zandy, an outside spokeswoman for Cisco, said in an e-mailed statement. “We have stated previously that we believe we are paying a fair price for a quality asset.”

‘Fair Value

Wyser-Pratte Management Co. said it rejected the Cisco offer, saying it “drastically undervalues” Tandberg.

“The fair value is from 165 kroner to 190 kroner,” said Guy Wyser-Pratte, its chairman. “What I don’t like, is I see these cozy arrangements with the chairman and managers. Instead of thinking of shareholders, they are thinking of themselves. They should be more inclined to take care of their shareholders. That is their fiduciary responsibility.”

Folketrygdfondet, Norway’s domestic pension fund and Tandberg’s largest shareholder, declined to comment.

“We don’t comment during the process,” said Olaug Svarva the managing director of Folketrygdfondet, which holds 10.09 percent of Tandberg.

Cisco had $35 billion in cash at the end of July. Cisco’s offer was 11 percent more than Tandberg’s closing price on Sept. 30. The bid is also a 38 percent premium to the closing price on July 15, prior to news reports of a possible transaction, the San Jose, California-based company said in a statement.

“If Cisco withdraws the bid then probably Tandberg shares will drop from the 150-plus bid that Cisco put out,” said Michiel Plakman, who helps oversee the equivalent of $150 billion at Rotterdam-based Robeco NV, including Cisco shares. “I would be surprised if they actually did so. I think it’s tactics with regards to the investors that actually want a slightly higher bid for Tandberg. ”

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net; Edward Evans at eevans3@bloomberg.net

Last Updated: October 30, 2009 16:07 EDT