Teachers' Private Capital, the private equity arm of the big pension plan and Thoma Bravo will pay $21 per share in cash for the technology company.
Shares of Riverbed (Nasdaq:RVBD) jumped more than nine per cent in morning trading before falling back slightly to close up $1.57 or 8.38 per cent to $20.21 on Monday.
Riverbed's board has unanimously approved the deal following a review of strategic options that was announced in October.
Riverbed chief executive Jerry Kennelly will continue to run the company which sells computer networking equipment and provides IT services and support.
“Having undertaken a thorough strategic review, during which we assessed a wide variety of options to maximize value, the board unanimously concluded that partnering with Thoma Bravo was the best choice for Riverbed," Kennelly said in a statement.
"With the benefit of Thoma Bravo’s knowledge and insights, combined with the added flexibility we will have as a private company, Riverbed will be able to focus on reaching the next level of growth, which will benefit our employees, customers and partners.”
The deal, which is expected to close in the first half of next year, is subject to approval by Riverbed stockholders and various regulatory approvals.
Riverbed had rejected in January a $3.08 billion buyout offer from Elliott Management, saying it undervalued the company.
Elliott is one of Riverbed's biggest shareholders, with a 9.6 per cent stake in the company, according to FactSet.
Elliott executive Jesse Cohn said in a separate statement Monday that his firm was "delighted" with the latest buyout offer, and they commend Riverbed's board for "taking this bold step."
Thoma Bravo focuses on technology-related investments. It said in September that it would spend about $2.5 billion to buy Compuware and take the software developer private.
— With files from The Associated Press
Note to readers: This is a corrected story: A previous version said they would pay $21 rather than $21 per share for the company