(Adds Riverbed's statement)
By Neha Alawadhi and Soham Chatterjee
Jan 8 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.
For a Breakingviews column on the offer
Elliott affiliates said in November that Riverbed was
significantly undervalued and should consider a strategic
Gabelli & Co analyst Hendi Susanto said the offer was below
his valuation of $25 per share for Riverbed, based on 14 times
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.
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 confirmed that it has received a proposal from
Elliott and said its board would review the offer taking into
account the company's current plan and growth initiatives.
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
The rise in Riverbed shares since Elliott's November
statement has factored in the possibility of a deal, Seyrafi
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 10 percent at $19.61 in afternoon
trading on the Nasdaq.
(Additional reporting by Nicola Leske in New York and Chandni
Doulatramani in Bangalore; Editing by Kirti Pandey)