Elliott Offers to Acquire Riverbed for $19.00 Per Share in Cash

NEW YORK--(BUSINESS WIRE)--

Elliott Management Corporation (“Elliott”) today sent a letter to the Board of Directors of Riverbed Technology (NASDAQ: RVBD) offering to acquire all of the outstanding shares of common stock of Riverbed for a price of $19.00 per share in cash.

Elliott, affiliates of which collectively own or have economic exposure to approximately 10.5% of the common stock and equivalents of Riverbed Technology, Inc., is a multi-strategy investment firm with deep experience investing in public and private companies.

Full text of the letter follows:

“January 8, 2014

Riverbed Technology, Inc.
199 Fremont Street
San Francisco, California 94105
Attn: Jerry Kennelly, Chief Executive Officer and Chairman of the Board

Dear Members of the Board of Directors:

I am writing to you on behalf of Elliott Associates, L.P. and Elliott International Limited (collectively, “Elliott” or “we”), which collectively own or have economic exposure to approximately 10.5% of the common stock and equivalents of Riverbed Technology, Inc. (“the Company” or “Riverbed”), making Elliott one of the Company's largest stockholders. Elliott is a multi-strategy investment firm with over $23 billion in assets under management focused on employing detailed research to address complex investment situations. We have considerable experience in the technology sector involving both public and private investments.

Based on our detailed review of Riverbed's publicly available information, our significant diligence of the Company's products and end-markets, and our substantial experience in the networking industry, we are pleased to submit this proposal to acquire all of the outstanding shares of common stock of Riverbed for a price of $19.00 per share in cash.

In addition, in order to guarantee that stockholder value is being maximized, we have included in our filings today a draft merger agreement that contemplates a “go shop” provision that would allow the Board to solicit competing proposals for a period following execution of our agreement. 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. Our draft merger agreement contains no financing condition, and we have endeavored to make this a document that is both customary for transactions of this type and fair to both sides in order to facilitate a quick negotiation. We are eager to move ahead expeditiously.

Our proposal is subject to a confirmatory due diligence review of the Company which, with the cooperation of management, we believe can be completed within 30 days. With access to private diligence materials, we believe there is a further opportunity to increase our current offer, which is based on publicly disclosed information only. We are available to sign an appropriate confidentiality agreement and commence our due diligence review immediately.

By any measure, we believe our proposal represents a compelling opportunity that your stockholders will find extremely attractive. At $19.00 per share, our offer represents a premium of 29% over the Company's unaffected stock price of $14.70 prior to our significant acquisition of stock, 26% over the Company's stock price as of the date Elliott filed its Schedule 13D in November, and 28% over the Company's 60-day volume-weighted average price prior to our 13D filing. In addition, this price represents a premium of 6% over the Company's current market value, which we believe has been substantially inflated by the significant attention Elliott's 13D filing has generated in both public and private settings.

As you know, we began buying stock in Riverbed in September 2013. We believed that the Company was undervalued, but our research revealed a number of avenues that could be pursued to create significant value for stockholders. In November and December, we communicated our views to the Board, and we also met with Jerry Kennelly and Ernie Maddock following our Schedule 13D filing on November 8^th. Though this mostly private dialogue has been amicable, we have become concerned that Riverbed has not indicated a desire to explore the significant acquisition interest of numerous potential bidders, including us. That being said, we have greatly appreciated our ongoing dialogue with the Company, and we look forward to continuing it in an open and constructive way.

Riverbed is a long-established company that we have followed closely for several years, both as general technology investors and as investors over the years in your competitors such as Blue Coat and Packeteer. We believe in the quality of Riverbed's assets. The Company occupies a mission-critical position in thousands of networks, possesses extremely loyal customers who deeply value the Company's service and maintenance, and has a valuable and stable platform that is capable of producing significant profitability while generating revenue growth in its core and logically adjacent markets.

However, Riverbed's valuation has been impaired by slowing growth in its core WAN optimization market and by significant investments in both acquisitions and operating expenses undertaken to diversify away from the core WAN optimization business. As a result, we believe the Company's stock, prior to the filing of our 13D, meaningfully underperformed its peers and indices over nearly every significant time period. With over 35 years of experience investing in public and private companies and an extensive track record of successfully structuring and executing acquisitions in the technology space, we believe that Elliott is uniquely situated to deliver maximum value to the Company's stockholders on an expedited basis. Elliott is prepared to devote considerable resources to completing this transaction, and we are confident that with your cooperation we will be able to execute a definitive transaction agreement without delay.

We are prepared to meet immediately with you and your advisors in order to answer any questions about our proposal or the attached draft and to work out the details for moving toward a completed transaction. Of course, nothing in this letter is intended to create a legally binding obligation, and no such obligation will exist unless and until a definitive transaction agreement is executed. As a result of our substantial share ownership in Riverbed, SEC rules oblige us to make the existence and contents of this letter public. Please feel free to contact me to discuss or clarify any aspect of this proposal.

On behalf of Elliott, we are very much looking forward to working closely with the talented employees of Riverbed to bring the Company forward to its next phase of growth.

Very truly yours,

Jesse A. Cohn 
Portfolio Manager”

About Elliott Management Corporation

Elliott Management Corporation manages two multi-strategy hedge funds which combined have more than $23 billion of assets under management. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest hedge funds under continuous management. The Elliott funds' investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, high net worth individuals and families, and employees of the firm.