Riverbed Acquired Mazu Networks for a Minimum of $25 Million

Riverbed Technology has agreed to acquire Mazu Networks, a privately-owned company that helps organizations manage, secure and optimize the availability and performance of global applications. The Mazu organization, based in Cambridge, Massachusetts, will become a business unit of Riverbed. In connection with the acquisition of all of the outstanding securities of Mazu, Riverbed will pay approximately $25 million in cash at closing, with an additional possible payment to be paid subsequent to closing based on future sales performance.

Mazu Networks provides an analysis and reporting software that provides a holistic, real-time view of application usage and performance. This perspective is critical to understanding the application environment and taking the right steps to validate and ensure delivery of business-critical applications across the wide area network (WAN).

“The market for WAN optimization is fast becoming more mainstream and increasingly our enterprise and service provider customers are demanding more visibility, reporting and analytics capabilities from us as they seek to deploy more robust infrastructure for managing their global applications,” said Jerry M. Kennelly, president and CEO of Riverbed. “This requirement is driven by the enterprise’s need to reduce costs via consolidation, improve end-user productivity, and leverage technology to streamline business processes.”

The acquisition of Mazu Networks allows Riverbed to meet enterprise and service provider customer demands by extending its suite of WAN optimization products to include global application performance, reporting and analytics. This provides customers with a closed-loop system for managing enterprise-wide applications by intelligently monitoring and analyzing performance, demonstrating the need for return on investment (ROI) of optimization, and allowing users to continuously manage performance targets to predetermined objectives.

“Our service provider customers require an integrated system to monitor and deliver a managed WAN optimization service,” continued Kennelly. “By providing an integrated solution based on Mazu’s market-leading offerings, we are able to tailor the reporting to demonstrate the value of optimization, which in turn supports the value of the provider’s service to its customers.”

Riverbed has become the leading IT infrastructure performance company by delivering the benefits of speed, scale, and simplicity to thousands of customers around the world, and WAN optimization will continue to be the primary driver of Riverbed’s ongoing success. The Mazu product line supports Riverbed’s position by delivering speed in performance analysis, providing scale to Riverbed’s customers’ ability to monitor the optimization and performance of their key applications and allowing Riverbed to deliver simplicity in the analysis and reporting of that information across a customer’s entire environment with customizable dashboards and reports.

Key Financial and Other Terms of the Transaction:

• $25 million cash payment at closing
• Payment of up to $22 million in cash based on achievement of certain bookings targets in a defined twelve month period following the closing. The maximum payment would require they achieve $35 million in bookings.
• The closing of the acquisition is subject to customary closing conditions, including approval of Mazu’s stockholders
• The parties intend to consummate the acquisition as soon as practicable and currently anticipate that the closing will occur before the end of the first quarter of 2009
• The impact to Riverbed’s non-GAAP earnings is expected to be approximately breakeven in 2009 and accretive in 2010