Contrarian Corpus
activist full deck follow up
2014-03-11 · 14 pages

Riverbed Technology RVBD

N 3 Narrative
V 4 Visual
C 3 Craft
Original source ↗

The three reasons

  1. 1

    $21 cash bid is a 43% premium, exceeding median tech-deal premia across comparables

  2. 2

    Standalone Riverbed faces a ~1% CAGR core WAN optimization market and a failed OPNET integration

  3. 3

    Implied 13.5x LTM EBITDA multiple sits above peer and precedent-transaction medians

Primary demands

  • Riverbed board should accept Elliott's $21.00/share all-cash buyout offer
  • Grant Elliott customary due diligence so it can potentially increase its offer
  • Engage in a strategic dialogue rather than remain standalone

KPIs cited

Offer price per share
$21.00 cash, submitted Feb 25, 2014
Total Enterprise Value
$3,594mm implied at $21 offer
TEV / LTM Adj. EBITDA
13.5x at offer vs. 8.6x public-comp median and 11.3x precedent-transaction median
TEV / 2014E Adj. EBITDA
10.2x at offer vs. 8.2x public-comp median and 9.4x precedent median
Price / 2014E Adj. EPS
18.4x at offer vs. 15.5x public-comp median
Premium to unaffected share price
42.9% 1-day, 45.2% 30-day, 40.9% 60-day, 37.6% 90-day
Premium vs. analyst targets
22% premium over adjusted forward 12-month price-target mean of $17.16
WAN optimization growth rate
Decelerated from 28.0% (2011) to 8.9% (2012) to 2.8% (2013)
Core WAN optimization TAM
~$1bn annual market growing at only 1% CAGR
Revenue mix
71% of 2013 revenue from WAN optimization
Riverbed stock underperformance
Underperformed NASDAQ by ~69% and peer index by ~50% in LTM before Elliott involvement
Performance Management pro forma growth
Decelerated to 5.5% in 2013 including OPNET

Pattern membership

Where this document fits across the library's 12 rhetorical / structural patterns.

Notable slides (6)

Notes

Moelis & Company-prepared fairness/justification deck co-branded with Elliott, filed as EX-99.F (13D exhibit) supporting Elliott's $21/share cash buyout bid for Riverbed. This is unusual for an activist: Elliott is proposing to acquire the target outright rather than push operational change. Tone stays analytical/banker-style rather than adversarial; includes segment deep-dive on Application Acceleration and Performance Management, a curated analyst-commentary wall supporting the offer, trading comps, precedent transactions, and premiums-paid analysis. No CEO named as villain, though CTO Steve McCanne's resignation and CEO Jerry Kennedy's attribution of weak sales to the government vertical are cited as context in the share-price callout chart (p.8). Classified as follow_up because the deck explicitly references earlier Elliott 13D filings (11/8/13) and a prior $19 bid, with $21 being the raised offer.