Riverbed Technology Inc., the computer-networking company being pressured by an activist fund to increase shareholder value, is working with Goldman Sachs Group Inc. to help it study strategic options, people with knowledge of the situation said.
While Riverbed is not soliciting bids, it has already attracted informal interest from private-equity firms for a leveraged buyout, said the people, who asked not to be named because the process is private. Last week, Riverbed’s stock rose the most in more than a year after fund manager Elliott Associates LP said in a regulatory filing it acquired a 10.4 percent stake and will push for strategic changes at the San Francisco-based company. Before the Nov. 8 filing, the stock had fallen 23 percent this year.
Elliott said in the filing that Riverbed is “significantly undervalued,” considering that its technology speeds thousands of networks and plays a vital role for clients. Riverbed could boost its valuation by reviewing its strategy and capital structure, Elliott said. Riverbed responded by adopting a stockholder rights plan, imposing a “significant penalty” upon any shareholder acquiring 10 percent of the company’s stock without the board’s approval.
Representatives for both Riverbed and Goldman Sachs, a longtime financial adviser that managed the company’s initial public offering in 2006, declined to comment. With a 10.4 percent stake, Elliott would be Riverbed’s second-largest shareholder, according to data compiled by Bloomberg.
Riverbed climbed 8.3 percent to $19.04 yesterday after Bloomberg News reported that the company is working with Goldman Sachs, reversing earlier losses. It has a market value of more than $3 billion.
“Riverbed is focused on creating value for all of our shareholders and maintains an open dialogue with our shareholders, including Elliott,” the company said in a Nov. 8 statement.
Recent third-quarter results, with 21 percent year-over-year revenue growth and higher sequential operating margins, show the company’s commitment to “strong execution and solid expense management in a mixed economic and weak federal spending environment,” Riverbed said then.
Elliott, based in New York, has pressured technology providers including NetApp Inc., BMC Software Inc. and Compuware Corp. to boost shareholder value, after taking stakes in the companies. Activist funds generally buy shares and try to force corporate management and directors to make changes that boost investor returns.
Riverbed competes with companies such as F5 Networks Inc., providing technology that helps organizations manage data networks. Another rival, Blue Coat Systems Inc., was acquired by private-equity firm Thoma Bravo LLC for about $1.3 billion last year, after Elliott’s activism campaign.