NEW YORK (TheStreet) -- Riverbed Technology (RVBD) is gaining on Tuesday on news Elliott Management Corporation had sent a notice to its board increasing its all-cash offer to purchase all shares to $21 a share from a previous offer of $19 a share. The investment firm, one of Riverbed's largest shareholders, currently owns around 10.5% of common stock and equivalents.
The new offer represents a 5.8% premium to Riverbed's Monday closing price of $19.85.
By midafternoon, shares had added 5% to $20.84.
Elliott had previously made an offer to Riverbed on Jan. 8, which was later rejected on Jan. 15.
Since then, "our dialogue with Riverbed has yielded no indication that the company understands the potential for a sale process to create a value-maximizing outcome for its shareholders," the company said in a statement.
The offer "represents our deep and abiding skepticism that a maturing technology company whose efforts to diversify have resulted in significant lost value and whose stock has underperformed virtually every relevant benchmark over any time period since its IPO can offer superior value to stockholders on a publicly traded, standalone basis," Elliott Management said.
TheStreet Ratings team rates RIVERBED TECHNOLOGY INC as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate RIVERBED TECHNOLOGY INC (RVBD) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.6%. Since the same quarter one year prior, revenues rose by 19.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 66.66% and other important driving factors, this stock has surged by 27.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although RVBD had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- RIVERBED TECHNOLOGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RIVERBED TECHNOLOGY INC swung to a loss, reporting -$0.08 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus -$0.08).
- RVBD's debt-to-equity ratio of 0.63 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RVBD's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.51 is high and demonstrates strong liquidity.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Communications Equipment industry and the overall market, RIVERBED TECHNOLOGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: RVBD Ratings Report