Hedge fund threatens to approach shareholders directly if board of WAN optimisation vendor rejects its offer

Hedge fund Elliott Associates has tabled a $200m (£100m) offer for WAN optimisation vendor Packeteer.

In a letter to Packeteer's board, Elliott indicated that if the offer was rejected they would submit an offer directly to Packeteer's shareholders. The letter criticised Packeteer for "weak execution in terms of selling and developing its industry-leading products" and complained that Packeteer's board had, as yet, taken no steps to "formally address" Elliott's concerns.

The offer represents a 42 per cent premium on Packeteer's closing price on Tuesday of $3.86 a share, and Elliott described its offer as "compelling". Packeteer's stock shot up overnight, opening today at $4.96, up 28.4 per cent, and continuing to rise.
Elliott first called for Packeteer to be sold last June, claiming the troubled vendor would be an ideal target for a larger acquirer that could revitalise it. Elliott's letter to Packeteer's board this week lambasted the vendor for " inconsistent execution" and "poor performance", demonstrated by a 67 per cent fall in its stock price over the last year.

The letter requested a prompt response and advised Packeteer that Elliott was available to discuss the offer immediately. The letter said: "Our offer provides certainty, as it would be subject only to customary closing conditions and would not be subject to any financing condition.

"Considering Packeteer’s underperformance in terms of stock price and execution in relation to its peers, we believe this is an extremely attractive alternative for shareholders."