Paul Singer’s hedge funds, Elliott Associates, L.P. and Elliott International Limited, made an offer today to acquire all the outstanding shares of common stock of Riverbed Technology, Inc. (NASDAQ:RVBD) for approximately $3.08 billion or $19 per share.
Stock trading above acquisition offer
Reports regarding Elliot’s proposal drove the stock price of the equipment maker to trade higher. Riverbed Technology, Inc. (NASDAQ:RVBD) is trading about $20 per share, up by more than 12% at the time of this writing, around 12 noon in New York on Wednesday.
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Elliot is currently one of the largest stockholders of Riverbed Technology, Inc. (NASDAQ:RVBD), with a 10.5% stake in the network-equipment maker. Given the current price of the stock is above the acquisition offer, it seems Riverbed Technology shareholders anticipate a higher acquisition offer.
In its letter to the board of directors of Riverbed Technology, Inc. (NASDAQ:RVBD), Elliot emphasized that its offer is compelling and extremely attractive for its stockholders. According to Elliot, the $19 per share acquisition price represents a 29% premium to its unaffected stock price of $14.70 before it made a significant investment in the company.
Elliot initiated a position in the network-equipment maker in September last year because of a belief that the company was undervalued, and it could pursue several strategies to create significant value to shareholders.
Go shop provision
Elliot said its draft merger agreement included a “go shop” provision to enable the board of directors of Riverbed Technology, Inc. (NASDAQ:RVBD) to solicit proposals from other interested parties for a certain period of time.
“We are aware that numerous parties have expressed acquisition interest in Riverbed, and this structure guarantees that the company will secure a healthy premium for its stockholders while holding open the opportunity to obtain an even higher premium.”
In addition, Elliot said, his current offer was based only on information disclosed to the public and he might be able increase the proposed acquisition price. The investment management firm said, “With access to private diligence materials, we believe there is a further opportunity to increase our current offer. We are available to sign an appropriate confidentiality agreement and commence our due diligence review immediately.”