Riverbed Technology, Inc. RVBD
Riverbed's core WAN market is stagnant and the OPNET deal has disappointed; Elliott's $21 all-cash offer prices above peer and precedent-deal multiples, so the board should engage.
Thesis
Elliott Management, advised by Moelis, defends its $21.00 per share all-cash buyout bid for Riverbed Technology as a $3,594mm enterprise value deal carrying a 42.9% premium to the unaffected price and 45.2% to the 30-day average. Moelis argues the offer exceeds peer trading and precedent-transaction medians on every metric: 13.5x LTM adjusted EBITDA versus 8.6x peer median, 10.2x 2014E versus 8.2x, and the 30-day premium of 45.2% versus a 30.2% precedent median. The standalone case looks weak: core WAN optimization (71% of 2013 revenue) is a ~$1bn market growing only 1%, Riverbed's own WAN growth collapsed from 28.0% in 2011 to 2.8% in 2013, the $994mm OPNET acquisition missed integration targets and compressed EBIT margins, and the stock had trailed the NASDAQ by 69% pre-Elliott. The ask: grant customary diligence so Elliott can potentially raise its bid.
SCQA
Riverbed is a ~$1bn-revenue public enterprise-IT vendor leading WAN optimization (Steelhead) while expanding into Performance Management via its $994mm OPNET acquisition, alongside ADC and cloud-storage products.
Core WAN optimization (71% of 2013 revenue) is a ~$1bn market growing only 1%, Riverbed's WAN growth fell from 28% in 2011 to 3% in 2013, OPNET integration missed targets, and the stock trailed the NASDAQ by 69% pre-Elliott.
Riverbed's board should grant Elliott customary due-diligence access and engage on the $21.00 per share all-cash offer, which already exceeds peer trading multiples and precedent-transaction premiums.
$21 delivers a 42.9% one-day and 45.2% 30-day premium at 13.5x LTM and 10.2x 2014E EBITDA — above peer (8.6x / 8.2x) and precedent-deal (11.3x / 9.4x) medians.
The three reasons
- 1
$21 cash bid is a 43% premium — above the 30.2% median tech-deal premium
- 2
Core WAN optimization (71% of revenue) is a $1bn market growing only 1% CAGR
- 3
Implied 13.5x LTM EBITDA sits above peer (8.6x) and precedent (11.3x) medians
Primary demands
- Accept Elliott's $21.00 per share all-cash buyout offer
- Grant basic customary due diligence so Elliott can potentially increase its offer
- Engage in a strategic dialogue rather than remain standalone
KPIs cited
Pattern membership
Composition what's on the 14 slides
Slide gallery ·
Notes
Co-branded Elliott Management + Moelis & Company banker-style valuation deck filed as EX-99.F (13D exhibit) supporting Elliott's unsolicited $21 all-cash bid for Riverbed. Unusual posture for the activist corpus: Elliott here is the would-be acquirer defending the fairness of its own buyout price rather than pushing operational change at a portfolio holding. Structure is pure banker pitchbook: transaction summary, segment deep-dive (Application Acceleration, Performance Management), observations & challenges, share-price annotated timeline, curated analyst wall, trading comps, precedent transactions, and premiums-paid analysis. Tone stays analytical, not adversarial; no slide attacks management by name, though Jerry Kennelly and Steve McCanne's resignation are cited as share-price narration context on the annotated timeline. Classified follow_up because Elliott had already filed 13D on 11/8/13 and submitted earlier letters (1/8/14, raised $21 on 2/25/14); this March 11 deck is a subsequent public defense of the raised bid. No sum-of-parts; valuation argued on multiples and premiums vs. public comps and precedents. precedents_cited left empty — the deck cites M&A valuation precedents (BMC-Bain, Quest-Dell, JDA-RedPrairie, etc.) as comp math, not as campaign playbook analogies.