(Adds details, analysts' comments; updates shares)
By Neha Alawadhi and Lehar Maan
Jan 15 Riverbed Technology Inc rejected
hedge fund Elliott Management Corp's $3.08 billion offer,
increasing pressure on the network gear maker to deliver on its
Riverbed said the offer did not reflect its success in
turning around its business.
Shares of Riverbed, which also raised its fourth-quarter
forecast above analysts' expectations, rose to $20.02, above
Elliott's offer of $19 per share.
"Riverbed will continue to try to go it alone and execute on
its strategy, but Elliott may increase its bid to a point that
Riverbed finds acceptable," FBN Securities analyst Shebly
Seyrafi told Reuters.
Riverbed's revenue missed analysts' estimates in the first
three quarters of 2013 as the company struggles to integrate
Opnet, a maker of software to manage traffic on networks, which
it bought in 2012. The company had hoped the acquisition would
help counter a slowdown in its main wide-area network
Riverbed's shares have been languishing in the $20 range
since late 2011.
Elliott declined to comment.
"We now see private equity getting involved in the process
and possibly putting another bid in," said FBR Capital Markets
analyst Daniel Ives, who values Riverbed in the "mid-$20s".
Analysts have said potential bidders could include larger
rivals Cisco Systems Inc and F5 Networks Inc.
F5 shares were up 3.6 percent at $97.92 in midday trading on
the Nasdaq on Wednesday.
Elliott, run by Paul Singer, first disclosed a 9 percent
stake in Riverbed in November, and offered to buy the company
The hedge fund holds a total stake of 10.4 percent in the
Riverbed forecast first-quarter revenue of $262 million-$268
million, above analysts' average expectation of $258.5 million.
It estimated fourth-quarter adjusted earnings of 30-31 cents
per share on revenue of $284 million to $285 million. Analysts
on average were expecting earnings of 26 cents per share on
revenue of $273.3 million, according to Thomson Reuters I/B/E/S.
Elliott has trained its guns on network equipment companies
in recent months, building up stakes in two top firms.
Earlier this week, the hedge fund urged Riverbed rival
Juniper Networks Inc to buy back shares, start paying a
dividend and consider slimming down.
Goldman Sachs is financial adviser to Riverbed. Wilson
Sonsini Goodrich & Rosati is legal adviser.
(Additional reporting by Supantha Mukherjee in Bangalore;
Editing by Joyjeet Das and Sriraj Kalluvila)