Swedish vendor giant Ericsson is continuing to step up its efforts to match the technology breadth and scale of Alcatel-Lucent, announcing today a bid of almost $1.4 billion to acquire IPTV vendor Tandberg TV, which already agreed last month to be acquired by Arris Group.

Ericsson already owns almost 12% of Tandberg TV, and Ericsson CEO Carl-Henric Svanberg told Bloomberg.com that his company had been eyeing a bid on Tandberg since before Arris made its move on Jan. 15. The Arris bid was valued at around $1.2 billion.

"IPTV for cable and telecom operators is the biggest networked multimedia opportunity going forward. Ericsson and Tandberg Television is a strong combination with a unique ability to offer complete IPTV solutions, Svanberg said in a statement.

The company's bid for Tandberg follows its recent move to acquire Entrisphere, as well as a December bid to acquire Redback Networks as Ericsson continue to seek acquisitions in the wireline network edge arena that take it beyond it traditional wireless markets.
Think Equity Partners analysts don’t expect Arris to match Ericsson’s offer, which is 10% higher than the offer Arris made last month. And whereas Arris’ offer was a mix of cash and stock, Ericsson’s offer is all cash.

“We believe Arris will walk, potentially collecting a breakup fee, and refocus on other potential merger opportunities such as Terayon, Harmonic, or C-COR, just to mention some of the public companies,” Think Equity analysts wrote in a note issued this morning.

Though the IPTV space has seen a number of acquisitions lately, Ericsson’s grab for Arris surprised Think Equity analysts because Ericsson has partnered with both Tandberg and its rival, Harmonic. Acquiring Tandberg might endanger the Harmonic partnership, they said. “This is a similar situation to when Motorola acquired Broadbus and Cisco acquired Arroyo, both in the video-on-demand space. It points to a desire by the large systems integrators to get involved with all aspects of the IPTV food chain, even at the expense of competing with previous food chain partners.”

“Clearly, valuations in this space are going up with numerous acquisitions occurring in the last 12 to 18 months in particular, seemingly at an accelerated pace,” Think Equity analysts wrote.