American network performance specialist Riverbed Technologies will be acquired by Thoma Bravo LLC and the Ontario Teachers' Pension Plan for US$3.6 billion.

The deal is seen as a result of shareholder activism by Paul Singer, a notable hedge fund investor and the CEO of Elliott Management Corporation, which currently holds almost ten percent of the company.

Riverbed’s management has assured that a change of ownership will not have a noticeable impact on the company’s product range or its relationship with customers.

“On our level, it’s just an exchange of shareholding,” said Karl Campbell, recently appointed vice president for the UK and South Africa, at a meeting on Tuesday. “Life is pretty much the same today as it was yesterday: customer demands, discount demands, expectations around technology – nothing has really changed.

“But I think it’s a very good thing for Riverbed, it gives us an opportunity to reset our strategy for the next ten years.”

Business as usual
Riverbed (formerly Next Big Thing) was founded in 2002 by Steve McCanne and Jerry Kennelly to manufacture hardware for the nascent WAN optimization market.

McCanne and Kennely, who still serves as the CEO, led the development of the first SteelHead appliances – data center systems that increase the efficiency and performance of traffic between geographically diverse sites.

In the last few years, the company has diversified into network visibility and analytics with SteelFusion and SteelCentral products. Riverbed also launched a fully virtualized version of SteelHead in 2010.

According to Campbell, there are essentially two parts to the Riverbed business – the first deals with the enterprise customers directly, while the second sells appliances to network carriers.

Early next year, Riverbed will be sold to private equity firm Thoma Bravo and the Ontario Teachers' Pension Plan – an organization responsible for administering pensions for school teachers of the Canadian province, and one of the largest institutional investors in the world. For Thoma Bravo, the deal will become the largest investment in its 30-year history.

“You get different kinds of private equity companies. The companies that have bought us are not short-term investors. They are looking for longer term strategic play, whatever that might be,” Campbell told DatacenterDynamics.

“They try to preserve the value of the business. We’re not a company that’s being purchased for earnings growth, we’re a company that’s being purchased for revenue growth. And that’s the type of firm that Thoma Bravo are.

“So you can expect that the last thing they want to do is disrupt the business. They want to see how they could strategically invest in the business to drive growth. You’re not going to see a lot of change in Riverbed, if any.”

Under the terms of the deal, Kennely will retain his post as the CEO.

Current shareholders, including Elliott Management, have been offered $21 per share – a premium of 12 percent over their price on Friday. The hedge fund has previously campaigned for the sale of Compuware, NetApp, Novell and Blue Coat Systems, among others.

The deal is expected to close in the first half of 2015, subject to regulatory approval, including antitrust reviews in the US, Germany and Taiwan.