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Riverbed Technology Agrees to $3.6 Billion Takeover Bid

The network equipment company had been under pressure to sell from Paul Singer's Elliott Management hedge fund.

World Economic Forum / Remy Steinegger / Creative Commons

Thoma Bravo and the Ontario Teachers’ Pension Plan said they would buy network equipment maker Riverbed Technology for $3.6 billion, just over a year after the company’s biggest shareholder started agitating for a sale.

Paul Singer’s Elliott Management had been pressing Riverbed to sell itself due to a slowdown in its main wide-area network optimization business and its struggle to integrate Opnet, a maker of software to manage traffic on networks that it bought in 2012 for about $1 billion.

The offer of $21 per share in cash is a premium of 12 percent to Riverbed’s closing price on Friday. Riverbed’s stock closed at $20.31 on Monday.

Analysts said it was unlikely the offer, which matches an existing bid from Elliott, would be topped.

“Given the amount of time that Elliott Management’s offer has been outstanding … we don’t expect a superior offer to emerge,” Janney Capital Markets analyst Bill Choi said.

J.P.Morgan’s Rod Hall said the offer was fair, given the lack of growth in the company’s core business.

Riverbed, whose products boost data speeds on networks, said in October it would explore strategic alternatives.

The company in February rejected Elliott’s offer of $21 per share as well as its initial offer of $19.

Both offers had included a “go shop” provision, allowing Riverbed’s board to solicit competing bids.

The hedge fund, which held 9.65 percent of Riverbed as of Nov. 14, said it supported the deal with Ontario Teachers and Thoma Bravo.

Elliott is known for picking up stakes in technology companies and pushing for board control or a sale.

The Wall Street Journal reported earlier this month that Elliott was in talks with Juniper Networks, a rival of Riverbed, about adding a number of new directors to its board.

Elliott and its affiliates hold an 8.7 percent stake in Juniper.

The hedge fund has in the past pushed for a sale of technology companies such as Compuware, BMC Software, NetApp, Novell and Blue Coat Systems.

Tech-focused private equity firm Thoma Bravo ended up buying Compuware and Blue Coat Systems.

Frank Quattrone’s Qatalyst Partners and Goldman Sachs & Co advised Riverbed.

Up to Friday’s close, Riverbed’s stock had risen 24 percent since Elliott disclosed a stake in the company in November last year.

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