Hours after video conferencing vendor Tandberg’s (OSL:TAA) shareholders
failed to approve a proposed deal to be acquired by networking giant Cisco
(NASDAQ:CSCO), Logitech International
(NASDAQ:LOGI) announced plans to acquire
privately held video conferencing vendor LifeSize Communications.

LifeSize offers high-definition video conferencing solutions for the
budget-minded, with solutions priced at less than $10,000 and offered through
the channel with distribution partners such as Tech Data. Last month the
company introduced a
sub-$2,500 system called LifeSize Passport
, aimed at bringing HD video
conferencing to the masses.

PC communications vendor Logitech says it will acquire LifeSize for $405
million in cash—a deal that will give it access to LifeSize’s 9,000 video
conferencing customers across 80 countries that span large enterprises to small
businesses in verticals including public health care, education and government.

Logitech already offers lower-end Webcams used as peripherals with personal
computers, as well as other peripheral products for PCs—used mainly by

“We expect this acquisition to enable Logitech to extend our leadership in
video communication beyond the desktop,” says Gerald P. Quindlen, Logitech
president and chief executive officer, in a prepared statement. “Together we
can make life-like, HD-quality video communication as mainstream and seamless
as a telephone, for meeting participants in the boardroom, at their office
desk, in a remote-location meeting room, telecommuting from home or on the go
with a laptop.”

It’s not surprising that LifeSize found itself in play following Cisco’s
announced plans to acquire HD video conferencing vendor Tandberg last month.
Polycom and LifeSize are the other two significant players in the HD video
conferencing space. Polycom was quick to weigh in on the deal, as well, saying
that all the action around video conferencing shows that it’s set for the

“Today’s news is further evidence that visual communications is on the cusp of
going mainstream,” says Bob Hagerty, chairman and CEO
of HD video conferencing and teleconferencing equipment maker Polycom, in a
prepared statement. “We see this as creating additional opportunities for
Polycom and our partners as the only independent video solution provider of

LifeSize’s CEO says that this deal will
bring video conferencing to the masses faster.

“We believe that together with Logitech, we can realize that vision for all
enterprises—private and public—and small and medium businesses,” says Craig
Malloy, LifeSize co-founder and chief executive officer, in a prepared
statement. “Our combined proven innovation can accelerate mainstream adoption
of video communication by anyone, anywhere.”

The companies say they will pursue existing and new relationships with unified
communications, collaboration and VOIP industry partners and competitors to
drive the development of an open eco-system for interoperable video

Cisco has been criticized by many for the proprietary nature of its own HD
video conferencing solutions, although the company announced
earlier this week sweeping changes to its systems
to make them both
more open and easier to use.

LifeSize will operate as a separate division in its previous headquarters in Austin,
Texas, under the leadership of Malloy as
the LifeSize Communications CEO, reporting
to Quindlen.

LifeSize expects approximately $90 million in revenue in calendar year 2009,
with CY 2010 revenue expected to grow between 40 percent and 60 percent, the
companies said.

Logitech says it expects the acquisition to be neutral to slightly positive to
its operating income (excluding acquisition-related charges) in fiscal year
2011, which ends March 31, 2011,
and positive thereafter.

The acquisition is subject to customary closing conditions, including antitrust
approval, and is expected to close in December.