Wednesday, October 14, 2009

Riverbed Supposedly has $34-35 Offer on the Table

Rumors of buyouts fly around all the time, but its interesting to see that the one involving Riverbed Technology (RVBD) has been so persistent. Now seeing reports that an offer for $34-35 in now on the table from both Hewlett Packard (HPQ) and Juniper Networks (JNPR). RVBD has been one of the best performing companies during this recession having actually grown revenue YOY. That list is very small so it isn't surprising that they'd become a takeover target.

That offer would be nearly 40% above the $24-25 level today and would be very enticing to Stone Fox Capital. We have no doubt that RVBD would reach these levels themselves within the next year, but why take the chance. Better to have the money on merger Monday, then wait for the hard work. Also as the stock market melts up to our targeted 1,200 range we'll be looking for stocks to cash out of and this deal would just make it easier.

Now wouldn't it be funny if that analyst from Wells Fargo places a Market Perform ranking on RVBD right before they get a huge buyout. We seriously doubt all the positives are already in the stock.

  • Wells Fargo analyst Jess Lubert today launched coverage of the company with a Market Perform rating and a valuation range of $23-$25. “We are positive on Riverbed’s positioning in the $1 billion WAN optimization market and we believe the company should benefit from its growing distribution channel,” Lubert writes, while adding that “positive developments in the company’s business are fully reflected in the stock price.”

Stay tuned for more noise on this potential deal. Options continue to fly in the Oct $25 and Nov $30 strikes so something is brewing. RVBD is a core position of our Growth Portfolio.

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