Riverbed Nixes Upgraded Elliott $3.36B Takeover Bid

Riverbed Technology (RVBD) late last week rejected an upwardly revised $21-per-share, or $3.36 billion, takeover bid by activist investor Elliott Management, with the WAN optimizer’s board again saying the new offer failed to “deliver value to our shareholders in excess of what we believe will be created as we execute on our growth plans.”

Separately, word leaked from Riverbed sources that a number of new suitors were prepping bids above Elliott’s $21 a share offer. The unsolicited offers, all of which were in the $25-per-share range and turned aside by Riverbed, are said to come from private equity firms Silver Lake Management, Thoma Bravo and KKR, backed by financing from Credit Suisse and Jeffries, according to a Bloomberg report.

In early January, Riverbed nixed an unsolicited $3.1 billion takeover bid from Elliott, a 10.5 percent shareholder, saying at the time the offer undervalued the company. Riverbed’s shares closed trading at $22.28 on Feb. 28 and the company’s market value currently stands at $3.56 billion. Its stock has traded at or above Elliott’s initial $19-per-share bid for the company since Jan. 8, posting a 7 percent rise in the past five weeks.

Elliott, whose history includes taking large positions in NetApp (NTAP), BMC Software and Compuware (CPWR) and subsequently pressing management for changes to up the value of its investment, appears to be following a similar playbook with Riverbed. Since taking an initial, sizeable position in the vendor last September it has pressured management to modify the company’s strategy, calling its stock undervalued.

“Riverbed’s board has again failed shareholders,” Elliott said in a statement. “The clear and correct path forward for the company is to engage in a dialogue with Elliott and other interested buyers so that we can conduct expedited diligence toward exploring a value-maximizing transaction.”

In its January bid, Elliott included a “go shop” clause that allows Riverbed to solicit higher bids, suggesting the hedge fund may be more interested in forcing a sale than in buying the vendor itself.

Riverbed reported $283 billion in sales for its Q4 2013, a 19 percent year-over-year jump, and $8 million in net income, a 60 percent uptick from the same period last year. For FY 2013, Riverbed lost $12 million on a 24 percent revenue gain to $1 billion. The company has said it expects Q1 2014 sales at $262 million to $268 million.