One day after it instituted a poison pill policy to ward off hostile takeover bids, networking optimisation vendor Riverbed Technology is reportedly working with investment banking firm Goldman Sachs to broker the sale of the company.
Under pressure from activist stakeholder Elliot Associates LLP to increase its market value, Riverbed has turned to Goldman to explore options including a sale, according to Bloomberg. Elliot currently owns a nine per cent stake in Riverbed, which has a total market value of around $2.8bn.
Riverbed is already attracting interest from private-equity firms seeking leveraged buyout of the vendor, Bloomberg reported, quoting anonymous sources close to the situation. Elliot Associates owned a 13 per cent stake in Riverbed rival Blue Coat Systems in 2011 when it made a similar push that resulted in the $1.3bn acquisition of Blue Coat by Thoma Bravo.
Word that Riverbed might be grooming itself for a sale came one day after Riverbed officials announced a poison pill defense that would radically alter share structures if an investor gained 10 percent or higher stake in the company. While Riverbed didn't name Elliot Associates specifically in the poison pill action, the measure was taken one week after Elliot disclosed its 9 percent stake and issued a statement saying it felt the technology vendor's shares were "undervalued."
Earlier this month, Riverbed reported Q3 revenues just slightly below analysts' estimates at $265m on otherwise strong earnings. Concerns were raised for Q4 however as Riverbed officials noted the difficulty of rebounding from a lackluster quarter during which the company was punished by the federal government sequestration shutdown. Riverbed normally sees 25 per cent of its revenues from government contracts in the third quarter, but that share fell to 18 per cent as a result of the shutdown, a loss of around $20m, officials said.
The rough stretch hasn't kept Riverbed from innovating, a fact that could make the vendor attractive to the right suitor. Just this week Riverbed announced the availability of its updated Stingray 9.5 traffic manager software on Amazon Web Services' GovCloud, a segregated region of the AWS cloud designed for government agencies, contractors and others needing secure and compliant cloud space for sensitive and regulated workloads.
And over the summer, the company updated the RiOS software in its Steelhead WAN optimization gear to ease management of hybrid MPLS and Internet networks and improve network optimization for applications from NetApp and Microsoft.
Riverbed also rolled out a new Steelhead appliance aimed at SMBs and branch offices with greater bandwidth capacity than its existing low-end wares.
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