Elliott Management Corporation raised its proposal to acquire Riverbed Technology, Inc. (NASDAQ:RVBD) in a new letter sent to the board of directors of the company. Elliott is now offering an acquisition price of $21 per share.
The shares of Riverbed Technology, Inc. (NASDAQ:RVBD) rose 4% to $20.66 per share today.
Riverbed rejected Elliott’s previous offer
The board of directors of Riverbed rejected the previous $19 per share takeover proposal of Elliott. The investment management firm continued to engage in discussions with the company and fellow shareholders since the rejection of its proposal.
According to Elliott, its discussions with the company seemed to indicate that it does not understand that a sale process could create potential to maximize value for shareholders. However, the board of directors of Riverbed Technology, Inc. (NASDAQ:RVBD) stated that it would “carefully review any credible offer” as long as it can deliver value in excess of its status quo path. Elliott emphasized that the statement of the board was inconsistent with its decision to continue to the substantial acquisition of Riverbed Technology, Inc. (NASDAQ:RVBD).
New offer represents premium value
Elliott emphasized that its new offer to purchase all the outstanding common stock of Riverbed Technology, Inc. (NASDAQ:RVBD) represents an “undeniably premium value,” which is significantly higher than its unaffected un-affected stock price of $16 to $17 per share.
The investment management firm also said that its proposal demonstrates its commitment to the value-maximizing potential of the high-quality assets of the company and its strategic positioning within its markets. Elliott added that it also represents its deep and abiding uncertainty regarding its efforts to diversify as a maturing technology company—which resulted in significant lost value and stock underperformance compared with every relevant bench mark over any period since its IPO.
Elliott said its offer still included a “go shop” provision to allow the board of directors of Riverbed Technology, Inc. (NASDAQ:RVBD) to seek competing proposals for a period after execution of its agreement. It proposal is also subject to confirmatory due diligence review of the company, which is expected to be completed in 30 days. The investment management firm reiterated its previous statement that its current offer could increase because it was only based on publicly disclosed information.
The investment management firm together with its affiliates collectively own a 10.5% stake in Riverbed Technology, Inc. (NASDAQ:RVBD). Elliott is the largest stockholder of the company.
Elliott also said that it is aware of the existence of other potential buyers, but the board of directors has been ignoring them. The investment management firm pointed out that shareholders shout be “outraged” by the behavior of the board.
“This behavior is inconsistent with the fiduciary responsibilities of a public company board, whose obligation is to maximize value for shareholders,” according to Elliott.