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Hedge Fund Giant Accuses Riverbed Of Misleading Investors

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Paul Singer’s Elliott Management has turned up the heat with Riverbed Technology, Inc. (NASDAQ:RVBD), accusing the technology firm of misleading its investors.

Riverbed management and board have “crossed a line to actively misleading shareholders”

“By publicly denying the buyer interest that has been expressed to the Company and by comparing the value of Elliott’s bid to a false reality, Riverbed’s management and board have crossed a line from failing shareholders to actively misleading them as well,” Jesse Cohn, portfolio manager at Elliott, said in a regulatory filing.

Numerous parties are said to have contacted the Company to express interest in buying Riverbed, based on reports of direct representations between Riverbed and Elliott.

Elliott contends that strong buyer interest exists and has been directly expressed to Riverbed Technology, Inc. (NASDAQ:RVBD) and its advisors, the report said, yet thus far been ignored by Riverbed’s board of directors. Furthermore, despite making a $21-per-share cash bid, as reported in ValueWalk, and “indicating that we could potentially increase our own offer if given access to diligence, Riverbed has denied us the opportunity to conduct any diligence.”

“Highly misleading statements in the face of a very real opportunity to maximize value for shareholders through a transaction”

“It is bad enough that this Board has overseen a history of poor execution, an overpriced acquisition and severe stock price underperformance relative to all relevant benchmarks and peer averages over any period of time. Now, this same board is allowing management to make highly misleading statements in the face of a very real opportunity to maximize value for shareholders through a transaction,” Cohn said.

In the 13D filing, Elliott posted a presentation from the investment bank Moelis & Company, which was done to validate Elliott’s $21-per-share bid for Riverbed, which is being apparently ignored.  “Riverbed purports to take seriously any offer that is ‘serious’ and ‘credible.’ As the presentation put forward by Moelis today shows, our bid of $21-per-share represents compelling value for Riverbed shareholders that any responsible Board should explore,” Cohn said. “The clear and correct path forward is for the Board to stop misleading shareholders and instead allow all interested buyers, including Elliott, to conduct diligence with an eye toward exploring a value-maximizing transaction.”

Riverbed CFO denies existence of “credible” offers in $25 range

At an investor conference last week, Riverbed Technology, Inc. (NASDAQ:RVBD) CFO Ernie Maddock appeared to ignore the existence of Elliott’s $21 per share offer.  When asked if Riverbed received unsolicited offers in the $25 range, Maddock replied, “I think it’s reasonable to assume that, had those existed, there would have been some response.” After this Riverbed CEO Jerry Kennelly told Bloomberg that a “serious” party had not made a “credible” bid, a direct swipe at Elliott.

We’re taking our time, says Riverbed

When explaining analysis behind the assertion that Elliott’s $21-per-share bid undervalued the Company, Maddock stated in the report, “We did the traditional math, and looked at growth rates … And the conclusion was that as things exist today, there is likely more opportunity in allowing the Company to continue to execute its plan.”

“We’re choosing to take our time, energy, and attention and focus it on the execution of our business plan, which ultimately is the way of creating long-term shareholder value and that’s what we’re paid to do,” Maddock said.

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