Riverbed Gets $19 Offer

Last February, shares of Riverbed Technology ($RVBD) got smashed. In March, I highlighted Riverbed when it had fallen below $15 per share. I said “the shares have dropped down to a good price.”

RVBD bounced around for much of last year but started to catch fire in late October. The stock closed yesterday at $17.85. Today brought word that Paul Singer, a prominent hedge fund manager, is offering $19 per share for RVBD.

“We believe in the quality of Riverbed’s assets,” Jesse Cohn, an Elliott portfolio manager wrote in a letter to Riverbed’s board of directors. “However, 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.”

Elliott Associates first took a stake in Riverbed in September and by November the New York-based activist hedge fund had disclosed a 10.4% stake in the company, causing the company’s stock to rise. Elliott has said it believes the company is “significantly undervalued.”

The stock zoomed higher today. The market, apparently, expects more, perhaps a counteroffer. RVBD is currently at $19.83 per share.

Posted by Eddy Elfenbein on January 8th, 2014 at 2:27 pm

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