Forest Laboratories (FRX), Riverbed Technology (RVBD) Rally

The shares of Forest Laboratories Inc (NYSE:FRX) and Riverbed Technology Inc (NASDAQ:RVBD) rallied significantly on Wednesday.  Reports of acquisition/proposed buyout drove the stocks higher.

Forest Laboratories rose 18% on Aptalis acquisition

The stock price of Forest Laboratories, Inc. (NYSE:FRX) increased by nearly 18% to $16.29 per share after the company disclosed its agreement to acquire Aptalis for $2.9 billion. According to Forest Laboratories president and CEO Brent Saunders, the acquisition will help the company accelerate its strategy in building “blockbuster therapeutics areas.” Apatalis specializes in Gastrointestinal and Cystic Fibrosis.

Saunders said, “Aptalis is an excellent strategic and financial fit for Forest because of its strong product offerings in two therapeutic franchises that are complementary to Forest – GI in the U.S. and Canada and Cystic Fibrosis in Europe.”

Forest Laboratories Inc (NYSE:FRX) said the deal allows the company to generate additional $700 million revenue, and expected to achieve $125 million in synergies by 2016. The acquisition is also expected to be accretive to its EPS by about $0.78 in FY2015.

Riverbed Technology surged 9% over Elliot’s offer

The shares of Riverbed Technology Inc (NASDAQ:RVBD) increased by more than 9% to $19.53 per share after Elliot, the hedge funds controlled by Paul Singer proposed to acquire all the outstanding shares of its common stock for $19 per share.

Elliot is one of the largest shareholders of Riverbed Technology Inc (NASDAQ:RVBD) with 10.5% stake in the company. According to the investment management firm, its proposed acquisition is compelling and extremely attractive to stockholders because it represents a 29% premium to its $14.70 a share unaffected stock price before Elliot bought significant stake in the company.

Elliot started to acquire shares of Riverbed Technology Inc (NASDAQ:RVBD) in September last year. The investment management firm believed that the company was undervalued, and it has the ability to create significant value to shareholder if it would pursue several strategies. Elliot also acknowledged the fact that other entities are interested to acquire the company, so it decided to include a “go shop provision in its merger proposal.

“We are aware that numerous parties have expressed acquisition interest in Riverbed, and this structure guarantees that the company will secure a healthy premium for its stockholders while holding open the opportunity to obtain an even higher premium,” said Elliot.

In addition, Elliot indicated that its proposed acquisition price could go up because it was only based on publicly disclosed information. The investment management firm said, “With access to private diligence materials, we believe there is a further opportunity to increase our current offer.