Elliott Management Bids $3 Billion for Riverbed
Riverbed considers unsolicited bid as the WAN optimization vendor determines its future.
WAN optimization vendor Riverbed could soon be getting new ownership, if a new bid announced this week goes through.
Hedge fund manager Elliott Management is now bidding $19 a share to acquire Riverbed, valuing the company at approximately $3 billion. The key motivator for the Elliott bid is to increase shareholder value, which, in Elliott's view, has been lagging.
"Riverbed’s valuation has been impaired by slowing growth in its core WAN optimization market and by significant investments in both acquisitions and operating expenses undertaken to diversify away from the core WAN optimization business," Jess Cohn, portfolio manager at Elliott, stated in a letter to the Riverbed Board of Directors.
In response, Riverbed has publicly stated that the company is reviewing the Elliott offer. In an SEC filing, Riverbed noted that the $19/share bid is a 29 percent premium over Riverbed's 60 day average stock price prior to the bid, which was $14.70.
The WAN optimization market has been in a state of decline throughout much of 2013. Infonetics Research reported that WAN optimization revenues declined in the second quarter of 2013 by 11 percent.
Riverbed has been trying to reinvent itself of late as more than just a WAN optimization vendor. In November of 2013, the company held its annual analyst day event emphasizing a transition to a broader approach to networking.
"Although we're now known as a WAN optimization company, we're actually a lot more than that. We're the location-independent computing company," Riverbed CTO David Wu said at the time.
Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist