Riverbed Technology Inc., the network-equipment maker being pushed to sell itself by an activist investor, has received interest from private-equity firms above the $21 a share offer it rejected yesterday, people with knowledge of the situation said.
Informal, unsolicited expressions of interest approaching $25 a share from buyout firms including Silver Lake Management LLC, Thoma Bravo LLC and KKR & Co. have been rebuffed by the company, said the people, who asked not to be identified because the process is private. Banks including Credit Suisse Group AG and Jefferies Group LLC are in talks with the firms to potentially finance such a deal, the people said.
Riverbed turned down a takeover offer from Elliott Management Corp. yesterday as too low after the investment firm raised its bid to $3.36 billion, or $21 a share, from its $19 offer in January. The board of San Francisco-based Riverbed said the offer “is not in the best interests of shareholders,” according to yesterday’s statement.
Several banks are vying to provide the loans, which would likely fund about half of the purchase price, said one of the people. Elliott has urged the company repeatedly to start a formal sales process and allow potential buyers to conduct due diligence. In its Jan. 8 proposal, Elliott helpfully included a 78-page draft merger agreement with a go-shop provision that would let the company “secure a healthy premium” by talking to other suitors who may be willing to pay a higher price.
A representative for Riverbed declined to comment, as did spokesmen for Elliott, Jefferies, Credit Suisse, Silver Lake, KKR and Thoma Bravo.
Riverbed’s shares -- which traded at about $15 in early November before Elliott disclosed a stake and pushed for strategic changes -- climbed 7.9 percent to $22.28 at the close in New York yesterday, giving the company a market value of about $3.6 billion.
“Riverbed’s board has again failed shareholders,” Elliott said in a statement yesterday. “The clear and correct path forward for the company is to engage in a dialogue with Elliott and other interested buyers so that we can conduct expedited diligence toward exploring a value-maximizing transaction.”
Elliott has pressured technology providers including NetApp Inc., BMC Software Inc., Compuware Corp. and Juniper Networks Inc. to boost shareholder value after taking stakes in the companies. Activist funds generally buy shares and try to compel corporate management and directors to make changes that boost investor returns.
The New York-based investment company and its affiliates own about 10.5 percent of Riverbed, the firm has said, making it one of the company’s largest shareholders.
On Jan. 15, Riverbed rejected Elliott’s initial proposal and released preliminary fourth-quarter earnings results that it said show its business is gaining momentum. Chief Executive Officer Jerry Kennelly said at the time that sales topped the company’s targets in all of its major products and geographic regions.
“The board will carefully review any credible offer,” Riverbed said yesterday. “Any such offer must deliver value to our shareholders in excess of what we believe will be created as we execute on our growth plans.”
Goldman Sachs Group Inc. is Riverbed’s financial adviser.