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Ericsson makes surprise bid for TANDBERG

Looking to complete its portfolio of video and data delivery products from the network to the video headend, Ericsson last week made an offer of $1.38 billion for TANDBERG Television, topping a $1.2 billion bid for the company made by ARRIS in January.

The move has forced ARRIS, which has already begun acquisition talks with TANDBERG, to rethink its offer. An acquisition would offer a major infrastructure boost for the delivery of networked mobile television, because Ericsson is one of the largest handset makers in the world.

At a press conference announcing the offer, Carl-Henric Svanberg, president and CEO of Ericsson, said his company was interested in TANDBERG because of its strength in the video headend, encoding and compression technology market, as well as its large U.S. cable customer base. Ericsson has refocused much of its efforts on offering products for triple play services, where companies provide customers Internet access, television and telephone offerings in one bundle. The growth of such bundles has been powered by the rise of IP technology, which allows the delivery of video and data signals over one high-speed network.

Svanberg said that his company wanted to capture a large part of the IP-based services market, and it seems Ericsson has been doing just that during the past year. It purchased Entrisphere, a developer of fiber access solutions, in February, close on the heels of its purchase of Redback Networks, an edge router specialist, in December. It also owns the division of Marconi providing broadband network development services.

If the company acquires TANDBERG, it will own the telecom infrastructure, system integration, VOD platform, content distribution management and headed equipment and technologies needed to provide a full in-house IPTV solution. This would offer a comprehensive platform for the delivery of TV signals to mobile, as well as fixed, devices.

TANDBERG has not yet made a formal comment about the bid, telling the media that it needs time to review the offer. ARRIS stated in a press release last week that it is "currently accessing its options" in regard to the Ericsson offer. No word has been given as to whether ARRIS will up its bid.

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