Thoma Bravo, Elliott Management Technology’s M&A Odd Couple

Private equity firm Thoma Bravo and activist investor Elliott Management are proving to be technology’s M&A odd couple.

The investment firm has again stepped in where the hedge fund raised a ruckus, this time snapping up embattled WAN optimizer Riverbed (RVBD) in a $3.6 billion buyout after the vendor twice rejected Elliott’s earlier buyout bids.

Riverbed ultimately accepted Thoma Bravo’s and the Ontario Teachers’ Pension Plan’s $21 a share deal after turning away Elliott’s $3.36 billion offer in February, following a failed January $3.1 billion bid. Thoma Bravo’s cash offer amounts to a 12 percent premium over Riverbed’s closing stock price on Friday and a 3 percent bump over its share price at the end of Monday trading.

Both of the earlier Elliott offers for Riverbed included a “go shop” clause that allowed the vendor to seek competing bids. Thoma Bravo was said to be among a list of suitors emerging in the wake of Elliott’s second Riverbed offer.

Elliott, which held a 9.65 percent stake in Riverbed as of mid-November, followed a similar playbook with the WAN optimizer as it did with its other IT investments in taking strong initial share positions and subsequently pushing the board for control or agitating for a sale. As expected, since taking a sizeable position in Riverbed last September Elliott pressured management to modify the company’s strategy, repeatedly calling its stock undervalued.

The hedge fund’s history includes not only taking large positions in Blue Coat Systems, BMC Software, Compuware, NetApp (NTAP) and Novell but also paving the way for Thoma Bravo to step in and buyout some of those companies.

For example, in 2010, Thoma Bravo bought Novell for $2.2 billion; in February, 2012, it purchased Blue Coat for $1.3 billion; and, this past September it grabbed Compuware for some $2.5 billion.

The Riverbed acquisition is the largest Elliott-driven deal Thoma Bravo has consummated to date. Elliott publicly said it approved of the deal.

Riverbed, which went public in 2006 at $9.75 a share four years after beginning operations, has struggled to meet earnings expectations, as it shareholders gradually began to look for buyers as they saw the market for networked hardware shrinking.

As part of the Thoma Bravo deal, Riverbed chief executive Jerry Kennelly will remain at the company’s helm once the transaction clears shareholder and regulatory approval, expected sometime in the first half of 2015.

As for Elliott, it reportedly now is engaged with Juniper (JNPR), in which it owns a 9 percent stake, in a threatened proxy campaign. And, it remains to be seen what the hedge fund will do with its 2 percent stake in EMC (EMC) valued at about $1 billion. Reports in July and again in October indicated Elliott was prodding the storage giant to spin off its 80 percent interest in virtualization kingpin VMware (VMW) and PaaS startup Pivotal to boost its share price.