Riverbed Receives $3 Billion Offer from Hedge Fund Firm
Officials with Elliott Associates, who are offering $19 per share, want to increase shareholder value at the WAN optimization company.Riverbed Technology, a key player in the WAN optimization space and the subject of possible sales rumors over the last several months, could be bought by fund management firm Elliott Associates LP, a significant investor in the tech company. In a letter Jan. 8 to Riverbed executives, Elliott officials said they were prepared to offer $19 per share, bringing the price tag for the company to about $3 billion. However, that could go up—the stock price has jumped since news of Elliott's offer was released, hitting $19.90 mid-afternoon Jan. 10. In the letter to Riverbed executives—which was included in a filing with the Securities and Exchange Commission (SEC) by Riverbed—Elliott officials praised the company for its technology and its position in the market, noting that Riverbed "occupies a mission-critical position in thousands of networks, possesses extremely loyal customers who deeply value the company's service and maintenance, and has a valuable and stable platform that is capable of producing significant profitability while generating revenue growth in its core and logically adjacent markets. … We believe in the quality of Riverbed's assets." However, they also said Riverbed has been undervalued and company officials have not taken necessary steps to increase its value to stockholders. Elliott began buying shares of Riverbed in September, and has a strong background in the WAN optimization market, thanks to its research and investments in Riverbed rivals like Blue Coat Systems and Packeteer (which Blue Coat bought in 2008), Elliott Portfolio Manager Jesse Cohn said in the letter. Elliott officials had met with Riverbed executives in November and December to outline their views and suggestions about increasing the value of the stock. They noted that there has been "significant acquisition interest [by] numerous potential bidders, including us" in Riverbed, but that were concerned that Riverbed officials did not seem interested in pursuing any potential deals.