Investor launches stinging attack on Riverbed management
Elliott Management accuses board of complacency and actively misleading shareholders
Elliott Management Corporation has unleashed a verbal broadside on Riverbed's management and board after the vendor snubbed its $3.36bn (£2.02bn) takeover bid.
The investment firm wants to either buy or incite a bidding war for the WAN optimisation specialist but last month saw its $21-a-share offer rejected by its board, who claimed it was not in the best interest of shareholders.
Elliott struck back last night by issuing a stinging public statement accusing its management of "actively misleading" shareholders about buyer interest.
At the epicentre of Elliott's ire is an interview Riverbed chief executive Jerry Kennelly gave to Bloomberg last week which it claims contained "misleading distortions", including the assertion that no "serious" party had made a "credible" bid for the vendor.
"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," said Jesse Cohn, portfolio manager at Elliott, which owns a 10.5 per cent stake in Riverbed.
"Now, this same board is allowing management to make highly misleading statements in the face of a very real opportunity to maximise value for shareholders through a transaction."
Elliott yesterday filed a presentation by investment bank Moelis & Company which it claimed validates the attractiveness of its approach. It also claimed Riverbed had denied it the opportunity to conduct any diligence with a view to potentially raising its bid and said "numerous" other parties have contacted the vendor to express interest in buying Riverbed.
Referring again to the Bloomberg article, Cohn said: "Finally, in relation to the last part of Kennelly's statement, no CEO should ever state that there is "nothing broken to fix." This represents dangerous complacency and as the well-respected Silicon Valley businessman Andy Grove once observed, "complacency breeds failure".
Riverbed, which is aiming to reinvent itself as an "application performance infrastructure" outfit, said when it rejected Elliott's offer that its board will "carefully review" any "credible" offer to acquire the firm it receives.
"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," it added. "The board remains focused on delivering value to all Riverbed shareholders."