Private Equity Firm and Pension Fund Buy Riverbed for $3.6B

After rejecting a $3 billion takeover bid from hedge fund group Elliot Management at the start of the year, Riverbed Technology closed out the year by announcing that it has agreed to be acquired by private equity investment company Thoma Bravo and the Ontario Teachers’ Pension Plan for approximately $3.6 billion.

After a complete strategic review of options and continued pressure from Paul Singer's Elliot Management to sell, the Riverbed board unanimously decided that partnering with Toma Bravo was the right choice for the company, according to a release. Chicago-based Thoma Bravo has investments in many companies complimentary to Riverbed and its portfolio, as well as one, Blue Coat Systems, that is a competitor to Riverbed.

A little over a month ago Riverbed offloaded its SteelStore backup appliance line to NetApp for $80 million. After entertaining several acquisition offers in the past year Riverbed can close this chapter in company history and get Jesse Cohn, Elliot's activist portfolio manager who has been pressuring the company, off its back. Elliot has been publicly involved in many technology deals lately, some, like Riverbed and Dell, taking companies private, and others leading to acquisitions by larger companies.

In a statement on Riverbed acquisition, Jerry Kennelly, the company's chairman and CEO, said, "Thoma Bravo is a highly regarded private equity firm with deep experience in the technology industry and a 30-year track record of helping companies like ours flourish. With the benefit of Thoma Bravo’s knowledge and insights, combined with the added flexibility we will have as a private company, Riverbed will be able to focus on reaching the next level of growth, which will benefit our employees, customers, and partners."

This is the largest acquisition for the tech-focused Thoma Bravo ever. The $3.6 billion offer equates to $21 per share, which is a premium over Riverbed's current $20 per share price. A week ago Thoma Bravo agreed to sell Tripwire to Belden for $710 million, and just last Friday it completed its $2.4 billion acquisition of Compuware.

“Riverbed’s strong product portfolio provides unmatched optimization, visibility and control across the hybrid enterprise, which has positioned the company extremely well in a rapidly-changing landscape,” Orlando Bravo, a managing partner at Thoma Bravo, said in a statement.

Hardware and tools vendor Riverbed is a global company serving many Fortune 100 and Forbes Global 100 clients. The company began as a WAN optimization appliance provider, and grew into a leader in the application performance infrastructure space. Its SteelHead WAN optimization appliance is still a flagship offering, but the company has built a platform for optimizing scalable delivery of applications from private or public clouds to remote and mobile workers everywhere. It also broadened its portfolio through acquiring Mazu and CACE Technologies for network optimization, and OPNET and others in recent years.

The Riverbed acquisition is expected to complete in the first half of 2015, although it faces regulatory approvals and antitrust review in several countries. Riverbed says it will keep Jerry Kennelly, who also co-founded the company, as as CEO.