TheChek News Flow

http://www.sec.gov/Archives/edgar/data/1357326/000119312515004121/0001193125-15-004121-index.htm

 

From November of 2013 through early January of 2014 prior to the receipt of Elliott’s proposal, Riverbed and representatives of its financial advisor received six unsolicited inbound inquiries from private equity firms, including Thoma Bravo, soliciting Riverbed’s interest in an acquisition transaction. Based on the Board of Directors’ determination to proceed with management’s standalone operating plan, however, Riverbed’s Board of Directors determined that Riverbed should not engage in substantive discussions with any of the parties at such time.

 

On February 25, 2014, Elliott announced that it was increasing its offer price for Riverbed to $21.00 per share.

 

Throughout October and November of 2014, at the request of the Board of Directors, representatives of Riverbed’s financial advisors began a strategic and financial alternatives review and solicitation process of potential acquirors for Riverbed, and contacted twenty-three parties (ten strategic parties and thirteen private equity firms). Such parties included all of the private equity firms and the strategic party which had previously contacted representatives of Riverbed or its financial advisors to express their interest in an acquisition of the entire company, including Thoma Bravo and Party A. On October 17, 2014, financial and legal advisors to Riverbed also contacted Elliott and its legal advisors, and provided Elliott with a form of non-disclosure agreement.

 

From that solicitation process, seven private equity firms entered into non-disclosure agreements, containing standstill provisions that permitted the making of confidential proposals and which automatically terminated upon Riverbed’s entry into a merger agreement. Such interested parties attended management presentations delivered by Riverbed management in the period of October 27, 2014 to November 7, 2014, including one delivered to Thoma Bravo on October 28, 2014, and were granted access to an electronic dataroom containing additional non-public information regarding Riverbed.

 

On November 18, 2014, Riverbed received preliminary indications of interest from Thoma Bravo at $21.75 per share and from two of the other participants in the process: Party A, at between $21.00 to $22.00 per share, and another bidder, hereinafter referred to as Party B, at $21.00 per share.

The other five parties who received process letters declined to participate further in the process.

 

On the afternoon of November 20, 2014, representatives of Riverbed’s financial advisors communicated to Thoma Bravo the Board of Directors’ $24.50 per share proposal. On the same day, Thoma Bravo declined to make a revised offer at $24.50 but requested to remain in the bid process at its bid of $21.75 per share.

 

On November 22, 2014, Party A made a request to Riverbed that it be permitted to partner with a third-party private equity firm. Riverbed granted the request, and the additional private equity firm, hereinafter referred to as Party C, joined the process as a potential co-bidder with Party A.

 

Also on December 5, 2014, one of Riverbed’s executive officers had a meeting with the Chief Executive Officer of Party D, in which the individuals discussed potential rationales for an acquisition of Riverbed by Party D. No pricing or other terms of an acquisition were discussed.

 

On December 12, 2014, Riverbed received final bids from three parties participating in the process — Thoma Bravo, Party A (without Party C) and Party B.

 

 

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Thoma Bravo’s revised bid was at $20.50 per share, down from its initial indication of $21.75, which Thoma Bravo indicated was based on a variety of factors relating to its due diligence and updates to its financial model. The proposal was also accompanied by fully-executed equity and debt financing commitment letters, as well as a markup of the merger agreement that was substantially negotiated with WSGR.

 

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Party B’s final bid maintained the same $21.00 per share price indicated in its original bid. In its bid letter, Party B indicated that it was continuing to have conversations with debt financing sources but did not yet have committed financing on hand. It further attached lists of supplemental due diligence requests, upon which its final bid would be contingent, as well as a markup of the merger agreement and indicated that it would require an additional three weeks to be in a position to sign a definitive merger agreement.

 

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Party A’s revised bid was at an indicative range of $17.50 to $19.00 per share. Party A indicated that it did not have committed debt financing, and that it would require an additional four to six weeks to complete due diligence. Party A’s bid was not accompanied by any markup of the merger agreement.

Party D did not submit a bid. Party D indicated that, although it continued to have interest in acquiring Riverbed, it was unable to make a binding proposal or to provide an indication of value at this time, and that its internal processes would prevent Party D from entering into a binding agreement with Riverbed until well into January 2015, at the earliest.

On December 13, 2014, After discussion, the Board of Directors instructed representatives of Riverbed’s financial advisors to engage with Thoma Bravo to improve its bid in the following respects: (1) to improve the price per share of the offer, (2) to increase the termination fee payable to Riverbed in the event of a financing failure, (3) to strengthen the prohibitions on Thoma Bravo taking actions that would increase the regulatory risk that the transaction would not receive required regulatory clearances, and (4) to remove the requirement to deliver a voting agreement in support of the transaction from Elliott. The Board of Directors determined not to further engage with Party A, Party B or Party D pending resolution of negotiations with Thoma Bravo on the foregoing, as the Board of Directors placed significant value on the deal certainty offered by Thoma Bravo. 

Later in the day on December 13, 2014, Thoma Bravo contacted Mr. Kennelly, and indicated that it would be willing to raise the price per share to $21.00 in exchange for an informal commitment from Mr. Kennelly to remain with Riverbed for a minimum of two years post-closing, and to continue to take steps to improve Riverbed’s financial performance. Mr. Kennelly orally agreed to the Thoma Bravo requests. Thoma Bravo then communicated to representatives of Riverbed’s financial advisors that it was willing to offer $21.00 per share.

On December 14, 2014, the Board of Directors reconvened in a special meeting to consider the terms of the proposed transaction. Also participating were certain members of Riverbed’s management and representatives of Qatalyst Partners, Goldman Sachs and WSGR. The representatives of WSGR reviewed the terms of the draft merger agreement and described changes to the merger agreement which were finalized in the early morning with K&E, and reviewed certain other matters. The Board of Directors also discussed its view that the deal certainty of Thoma Bravo’s offer at a price of $21.00 per share made it superior to Party B’s bid and preferable to extending the process for Party B or Party D to complete further diligence.