Hedge fund manager Elliot Management is now bidding $19 a share to acquire Riverbed, valuing the company at approximately $3 billion. The key motivator for the Elliot 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.