Riverbed Technology announced on Wednesday that it had rejected a $3.2 billion takeover bid by the hedge fund Elliott Management and announced preliminary results for its fourth quarter that were better than expected.
In a statement, the company described Elliott’s offer of $19 a share as inadequate. The networking equipment maker didn’t say whether it would take the activist hedge fund up on its other demand: setting up a process to sell itself. But it didn’t close the door on such a move, either.
“While the board will carefully review any credible offer made to acquire the company, 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 and capitalize on the significant investments we have already made in that regard,†Jerry M. Kennelly, Riverbed’s chairman and chief executive, said in a statement.
While Elliott has made a takeover offer for Riverbed, the hedge fund is clearly trying to flush out other bidders for the company, which makes services to speed up network performance. The activist investor believes that an array of private equity firms and strategic rivals would express interest in buying the company.
For now, however, Riverbed appears to have bought itself some time with an early look at its fourth-quarter performance. It expects to report pro forma revenue of $284 million to $285 million, up from its previous guidance of $270 million to $276 million. And pro forma profit should come in at 30 cents to 31 cents per diluted share, well above its previous forecasts of 26 cents to 27 cents.
Shares in the company were up 1.8 percent in premarket trading on Wednesday, at $19.79.
Elliott will likely be happy with the better-than-expected results. But in a letter sent to the company’s board on Tuesday, the hedge fund warned that a sale would likely generate more value for shareholders than a standalone self-help plan, and supplied a number of quotes in support of beginning an auction process.
Elliott specifically outlined two paths that Riverbed could take: begin talking to prospective buyers, or reject any notion of entertaining a takeover bid. The latter, the activist investor argued, “deprives shareholders of the opportunity to explore a certain and substantial premium in favor of sight-unseen assurances from Riverbed that it has a plan that will lead to a better outcome.â€
The letter was sent ahead of a company board meeting held on Tuesday, in the hopes of keeping pressure on directors to consider forming a sales process.
A spokesman for Elliott did not have immediate comment.
Riverbed is being advised by Goldman Sachs and the law firm Wilson Sonsini Goodrich & Rosati.
