Caffeine levels at hedge fund Elliott Management must be at record levels: Only hours after firing a salvo across the bows of Juniper Networks, Elliott has increased the pressure on application delivery control (ADC) specialist Riverbed to accept the unsolicited takeover offer made last week. (See Riverbed Receives Takeover Bid and Investor to Juniper: 'You Suck'.)
Elliott offered $19 per share for Riverbed Technology Inc. (Nasdaq: RVBD)'s stock on January 8: Riverbed said it would "review" that offer but has since been silent ahead of a board meeting set for later this week.
Now Elliott, which holds a 10.5% stake in Riverbed, has published a letter that it sent to the Riverbed board, noting that it "has received overwhelmingly supportive feedback from shareholders and equity analysts for the idea that Riverbed should fully explore Elliott's offer to acquire Riverbed, as well as the other acquisition interest that exists."
Elliott is pressing Riverbed to "explore Elliott’s offer and any other credible interest," and "should attempt to solicit the highest price possible for the Company." Failure to do so would send the share price down from its current $19.93 to its pre-offer level of around $14-15, suggests Elliott, and "rejecting the idea of a sale evaluation and instead offering shareholders assurances that the Company has a plan for generating value as it moves into a difficult and uncertain future is an extremely risky proposition."
Rejection is certainly a possibility, as Riverbed last November instituted a stockholder rights plan, also known as a "poison pill," to deter unwanted takeover bids.
Elliott appears hopeful its $19-per-share offer can flush out higher bids, and Riverbed's current share price suggests other investors believe those bids are a real possibility. Various analysts cited in a Bloomberg report believe a higher bid might come from the likes of IBM Corp. (NYSE: IBM), Cisco Systems Inc. (Nasdaq: CSCO), or Juniper Networks Inc. (NYSE: JNPR), though any sort of offer from the latter seems most unlikely given this week's events.
— Ray Le Maistre, Editor-in-Chief, Light Reading