Riverbed Rejects Elliott’s $3.08 Billion Acquisition Bid

Riverbed Technology Inc. rejected Elliott Management Corp.’s $3.08 billion takeover bid and released preliminary fourth-quarter earnings results that show its business is gaining momentum.

Riverbed is focusing on a strategy to increase value for “all of our shareholders,” the San Francisco-based networking-equipment maker said in a statement today, calling Elliott’s offer too low. Elliott, which controls about 10.5 percent of Riverbed’s common stock, made the $19-a-share bid last week.

Riverbed touted the financial results, released two weeks before its scheduled earnings date, seeking to prove it can keep growing independently. Chief Executive Officer Jerry Kennelly said sales topped the company’s targets in all of its major products and geographic regions.

Revenue in the fourth quarter was $284 million to $285 million, the company said. Excluding some items, profit was 30 cents to 31 cents a share in the period. Analysts had estimated revenue of $273.3 million and earnings of 26 cents, according to data compiled by Bloomberg.

Elliott, a New York-based investment firm, is known for acquiring large stakes in companies and pushing for changes. The firm said yesterday in a letter to Riverbed’s board that it has spoken to the majority of the company’s shareholder base and investors were “overwhelmingly supportive” about its takeover efforts.

Stock Lags

Shares of Riverbed rose 1.6 percent to $20.11 at the close in New York. Prior to Elliott’s offer, the stock was trading at $17.85. Even after the bid fueled a rally, Riverbed is only up 3.1 percent in the past year, trailing the 26 percent advance in the Standard & Poor’s 500 Index.

Elliott made a similar offer for Compuware Corp. last year, aiming to spark a bidding contest for the technology company. In that case, the offer was turned down and other buyers didn’t materialize.

The firm also targeted Juniper Networks Inc. this week after amassing a 6.2 percent stake in the computer-networking provider. Elliott is seeking costs cuts, stock buybacks and other changes at the company.

Elliott built up its Riverbed stake last year. In November, the firm began pressuring the company to review its strategy and capital structure, calling the stock “significantly undervalued.” Riverbed then started working with Goldman Sachs Group Inc. to study strategic options.

“We continue to believe other strategic and financial buyers could enter the Riverbed bidding process over the coming months, as it remains a core strategic asset within the broader technology food chain,” Daniel Ives, an analyst at FBR Capital Markets & Co., wrote in a report today. He has the equivalent of a hold rating on the stock. “Investors continue to welcome a sale with open arms.”

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