OSLO, NORWAY: U.S. network equipment maker Cisco has raised its bid for Norwegian video conferencing equipment maker Tandberg, backed by holders of more than 40 percent of its shares, few of whom had warmed to its previous bid.

Cisco's new offer of 170 crowns per Tandberg share, up from the 153.50 crown bid that more than 90 percent of shareholders had dismissed, values Tandberg at nearly 19 billion Norwegian crowns ($3.41 billion).

Few analysts expected Cisco to walk away, having repeatedly touted online videoconferencing as a key growth area, especially as companies save on travel costs during the downturn.

Tandberg shares were up 3.9 percent at 163.80 crowns at 1040 GMT after a trading halt was lifted. In early trading the stock hit a lifetime high of 167.50 crowns.

"I think they will get Tandberg at 170 crowns," analyst Anita Huun at Handelsbanken said.

Panta Capital, a small London firm advising on merger arbitrage that had called the initial bid too low, said the new offer was "fair" and likely to succeed. "I think it's a done deal now," Peter Germonpre of Panta told Reuters.

Germonpre said the new offer was more in line with the valuation of the other major video conferencing equipment provider, U.S. Polycom Inc. He said the small group of shareholders whose views he had represented in his earlier statement would be much more inclined to tender their shares.

"FINAL PRICE"

Cisco said the offer, which expires on December 1, was backed by Tandberg's two largest shareholders, funds Folketrygdfondet and OppenheimerFunds, and had received acceptances from owners of more than 40 percent of its stock.

"The New Offer represents the ... final price for this transaction," Cisco said in a statement.

"If the offeror does not achieve the desired level of acceptances, the offeror will withdraw the new offer and evaluate alternative ways to expand Cisco's activities in the video communications market."

The offer is in line with analysts' views that Cisco could raise its bid to around 160 to 170 crowns.

A person familiar with the matter said the new offer followed a weekend of telephone calls made by Cisco officials and Cisco's financial advisers at Carnegie and Lazard to canvass shareholder opinions.

No other company has publicly shown interest in a bid, though analysts have talked of possible suitors such as Microsoft, Hewlett-Packard, International Business Machines (IBM) and Avaya.

Analysts have said that whether the deal closes or not, it could trigger more transactions involving videoconferencing companies such as No. 2 player Polycom. HP also offers high-end video conferencing.