Riverbed may go private in a $3 billion deal

An investment company wants to acquire the WAN optimization vendor

Investment company Elliott Management has offered to buy WAN optimization vendor Riverbed Technology for just over US$3 billion while giving Riverbed a chance to entertain higher bids.

Elliott started buying Riverbed stock last September and now owns about 10.5 percent of the company, according to an offer letter sent Wednesday that Riverbed filed with the U.S. Securities and Exchange Commission. Elliott said growth is slowing in Riverbed's core business and the company's efforts to diversify so far have hurt its value.

Riverbed's core products are appliances that help enterprises use expensive wide-area networks more efficiently. In recent years, the San Francisco company has acquired other businesses to expand its offerings, most notably buying Opnet in 2012 for about $1 billion for its tools to gauge and manage the performance of applications and networks. In addition to its Steelhead WAN optimization appliances, Riverbed now offers the Stingray line of application delivery controllers and Granite cloud computing technology.

Elliott's buyout plan includes a "go-shop" provision that would let Riverbed's board seek competing bids for a period after it reached a deal with Elliott.

"We are aware that numerous parties have expressed acquisition interest in Riverbed, and this structure guarantees that the Company will secure a healthy premium for its stockholders while holding open the opportunity to obtain an even higher premium," the letter said.

Elliott is offering to buy all of Riverbed's stock for $19 per share. Riverbed has about 162 million shares outstanding. The New York investment company said its offer represents a 29 percent premium over Riverbed's stock price before Elliott started buying large numbers of shares, a move that Elliott said has driven up Riverbed's shares.

In the quarter ended Sept. 30, Riverbed posted revenue of $262 million, up 20 percent from a year earlier, and a profit of $3.8 million, down from $24.7 million.

Elliott said it has long been involved with IT and networking companies. It was part of a consortium led by Bain Capital and Golden Capital that bought systems management vendor BMC Software last year for $6.9 billion.

In midday trading on Wednesday, Riverbed's shares were up $1.95 at $19.80.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

Tags business issuesElliott ManagementNetworkingRiverbed TechnologyMergers and acquisitions

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Stephen Lawson

IDG News Service

Comments

Comments are now closed.

Most Popular Reviews

Follow Us

Best Deals on GoodGearGuide

Shopping.com

Latest News Articles

Resources

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Latest Jobs

Shopping.com

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?