Unsuccessful in its efforts to spark a turnaround at Packeteer Inc., hedge fund Elliott Associates LP launched a bid Wednesday to buy the information technology firm for about $200 million.

Elliott in a letter to management, released Wednesday, said the fund, which owns about 9.8% of the Cupertino, Calif., company's shares, would pay $5.50 per share in cash for each share of Packeteer. The offer is a 42% premium to Packeteer's Tuesday close and a 19% premium to the firm's 30-day closing price.

Elliott said it has written numerous letters to the company over the past year and has spoken to management many times, but is frustrated that management and the board have not addressed its concerns.

The fund said in its letter it believes Packeteer's 37% share drop year-to-date and 67% drop over the past 12 months "is the result of weak execution in terms of selling and developing its industry-leading products."
The fund urged the company to come to the table to negotiate a definitive agreement, but said it was prepared to go directly to shareholders should Packeteer refuse.

"Our offer is compelling. It provides shareholders immediate, quantifiable value, which we do not believe Packeteer could achieve in today's challenging economic environment given its history of inconsistent execution," Elliott executive Jesse A. Cohn wrote.

"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."

Packeteer, which makes enterprise network management software, offered no comment Wednesday morning.

Elliott has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP to advise it in its bid. Packeteer shares opened up 31%, or $1.19, to $5.05 on Wednesday morning. -- Lou Whiteman