(Reuters) — Activist hedge fund Elliott Management Corp offered to
buy Riverbed Technology Inc for about $3.08 billion in cash, a move
analysts said was likely to trigger higher bids for the network
Riverbed shares rose as much as 14 percent to $20.29 on Wednesday,
above Elliott's offer price of $19 per share.
Elliott, run by Paul Singer, is known for publicly agitating for a
sale or a board shakeup in companies in which it invests, pushing
stock prices higher.
"With Riverbed shares currently trading above the $19 offer price,
we believe it represents the first step in this 'game of high stakes
poker', and that ultimately Elliott's activism will lead to higher
shareholder value for investors," FBR Capital Markets analyst Daniel
Ives wrote in a note.
Elliott has in the past pushed for a sale of technology companies
such as Compuware Corp, BMC Software Inc, NetApp Inc, Novell Inc and
Blue Coat Systems Inc.
Elliott affiliates said in November that Riverbed was significantly
undervalued and should consider a strategic review.
Gabelli & Co analyst Hendi Susanto said the offer was below his
valuation of $25 per share for Riverbed, based on 14 times 2014
The offer represents a 6 percent premium to Riverbed's Tuesday
close, but is 26 percent higher than the stock's price before
Elliott disclosed a total stake of 10.4 percent in the company in
The hedge fund said it could raise its offer if it was allowed
access to Riverbed's books.
Elliott also has a "go shop" provision in its offer, allowing
Riverbed's board to solicit competing bids.
"I don't think Riverbed's management currently wants to sell and
this could push the deal higher in my opinion," FBN Securities
analyst Shebly Seyrafi told Reuters.
Riverbed did not immediately respond to requests for comment.
Bloomberg reported in November that Riverbed was working with
Goldman Sachs Group Inc on a potential sale.
Riverbed has attracted interest from a number of private equity
firms, said a source familiar with the matter.
The company has been struggling with the integration of Opnet, a
maker of software to manage traffic on networks that it acquired in
2012. Through the acquisition, Riverbed aimed to counter a slowdown
in its main wide area network optimization business.
The rise in Riverbed shares since Elliott's November statement has
factored in the possibility of a deal, Seyrafi said.
Analysts said potential bidders could be larger rivals such as Cisco
Systems Inc, Juniper Networks Inc and F5 Networks Inc and enterprise
software companies like International Business Machines Corp,
Hewlett-Packard Co and Oracle Corp.
Riverbed shares were up 11 percent at $19.81 on Wednesday afternoon
on the Nasdaq.
(Additional reporting by Nicola Leske in
New York and Chandni Doulatramani in Bangalore; editing by Kirti