Elliott Reaffirms Bid As Riverbed Rebuffs Three Additional Suitors

Elliott Reaffirms Bid As Riverbed Rebuffs Three Additional Suitors
By World Economic Forum (Flickr: The Global Financial Context: Paul Singer) [CC BY-SA 2.0], via Wikimedia Commons

As unsourced press reports fly that Riverbed Technology, Inc. (NASDAQ:RVBD) is now in play, with private equity funds Silver Lake Management LLC, Thoma Bravo LLC and KKR & Co. L.P. (NYSE:KKR) said to have been recently rebuffed by Riverbed management, hedge fund Elliott Management is reaffirming their $21 cash offer.

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Extremely interested… but let us see the books

“Elliott remains extremely interested in acquiring Riverbed, and our $21 cash offer still stands,” Jesse Cohn, portfolio manager at Elliott, said in a statement. “Riverbed’s stock is trading meaningfully below our $21 offer, below our initial offer of $19 and vastly below the levels at which other potential buyers are interested.”  The stock was trading above $18 in early afternoon trading today.

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Several weeks ago Elliott hired the investment bank Moelis & Co. to dress up its $21 per share offer for Riverbed Technology, Inc. (NASDAQ:RVBD).  The key issue in the buyout, at this point, is access to Riverbed’s books, which the network equipment maker will not open to Elliott or any buyer.

Expect the board to “do the right thing”

“Shareholders clearly still expect that the Board will eventually do the right thing by engaging with Elliott and other potential buyers, but unfortunately our repeated requests for access to diligence materials have been ignored,” Cohn said. “By continuing its policy of ignoring premium offers and refusing to engage, this Board is depriving shareholders of significant potential value and opening the door to significant value degradation.”

Rebuffing interest from potential suitors, offers organized by Credit Suisse Group AG (ADR) (NYSE:CS) and Jefferies, is one way to lead to “significant value degradation,” but the activist investors remain optimistic.  “Elliott continues to believe that the best path forward for Riverbed Technology, Inc. (NASDAQ:RVBD) is for the Board to start acting in the best interest of shareholders by providing all interested buyers with access to diligence with an eye toward achieving a value-maximizing outcome.”

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com
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