Riverbed Tech Adopts Poison Pill Defense

Using a classic strategy aimed at fending off unwanted takeover attempts, Riverbed Technology (NASDAQ: RVBD  ) has concocted a poison pill defense. The company announced that its board of directors unanimously approved a new stockholder rights plan. The initiative gives shareholders the right to acquire one one-thousandth of a share of new series A preferred stock at an exercise price of $75 per each share of common stock they own. Those rights kick in only if an investor gains a 10% stake in the company, or if an institution officially discloses a 20% position, without the approval of the board. 

Although Riverbed did not specifically mention any investors in its press release, the poison pill is clearly a response to a disclosure by activist investor Elliott Associates last week that it had amassed a stake of roughly 9% in the company.

In releasing that disclosure, Elliott Associates described the technology firm's shares as "undervalued." The approximate 9% stake makes the investor Riverbed Technology's top shareholder.

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