Elliott Management Corporation has issued an official response to a series of statements made by the board members of Riverbed Technology, Inc. (NASDAQ:RVBD) regarding Elliott’s takeover offer. Paul Singer‘s fund announced on January 8, 2014 the intention to acquire all outstanding stock at a price of $19 per share, raising the offer to $21 per share on February 25, amid reports of takeover bids from other investment companies. Riverbed management rejected both bids.
As reported by Bloomberg, Riverbed CEO and Chairman, Jerry Kennelly said in an interview on March 5:
If a serious party wants to call me with a credible offer, I’ll take the call. I haven’t had that.
We’re not a proper target for activism. There’s nothing broken to fix.
Elliott Management had accused the board members of Riverbed of intentionally misleading their shareholders and not pursuing their best interests. As reported by the fund’s filing with the Securities and Exchange Commission, Jesse Cohn, portfolio manager at Elliott commented:
By publicly denying the buyer interest that has been expressed to the Company and by comparing the value of Elliott’s bid to a false reality, Riverbed’s Management and Board have crossed a line from failing shareholders to actively misleading them as well. It is bad enough that this Board has overseen a history of poor execution, an overpriced acquisition and severe stock price underperformance relative to all relevant benchmarks and peer averages over any period of time. Now, this same Board is allowing management to make highly misleading statements in the face of a very real opportunity to maximize value for shareholders through a transaction.
The day before, on March 4th, Riverbed had announced an increase in its buyback program by $250 million to $750 million. Elliott Management has branded this as an attempt to win investor trust. Jesse Cohn commented:
Riverbed’s shareholders want and expect the board to explore a value-maximizing sale, not to reflexively announce a buyback when the stock is up 35 percent on buyout speculation.
Paul Singer and Elliott Management have cumulative exposure to 10.5% of Riverbed Technology, Inc. (NASDAQ:RVBD)’s shares outstanding. The company has a market cap of $3.21 billion and does not pay a dividend.So far this year, the stock has advanced 11% to a current price of $20.03 per share. For the three months ending December 31, 2013, the company posted revenues of $283 million and earnings of $0.13 per share. Analysts expect the company to report revenues of $265 million and earnings per share (EPS) of $0.23 per share for the current quarter.
Paul Singer is also betting big on Juniper Networks, Inc. (NYSE:JNPR). According to another filing with the Securities and Exchange Commission, Elliott Management has massively increased its holding of the stock to 36.9 million shares, from just 2.6 million held earlier. The new position accounts for approximately 7.4% of the company’s common stock. Juniper is a provider of networking equipment and services, and has a market cap of $12.7 billion. The stock is traded at a trailing Price to Earnings (P/E) ratio of 29.xx, double the industry average of 14.00. For the fourth quarter of 2013, Juniper Networks posted revenues of $1.27 billion and earnings of $0.33 per share. Current quarter is expected to bring revenues of $1.15 billion and EPS of $0.29.