Hedge fund Elliott offers to buy Riverbed, higher bid expected

Wed Jan 8, 2014 2:58pm EST
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By Neha Alawadhi and Soham Chatterjee

(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 equipment maker.

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 earnings.

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 November.   Continued...