Citrix Merges With Tibco In $16.5bn Deal

Desktop and app virtualisation provider Citrix will be taken private after being acquired by private equity groups Vista Equity Partners and Evergreen Coast Capital.

Digging into the announcement, the two groups will acquire Citrix in an all-cash transaction valued at $16.5 billion, including the assumption of Citrix debt, and the move seems to come after years of pressure from activist shareholders.

It perhaps comes as no surprise that Evergreen Coast Capital is an affiliate of activist hedge fund Elliott Investment Management, which has been behind many corporate shakeups over the years, including Twitter, Dell, and Toshiba – to name but a few.

Activist pressure

And it should be remembered Elliot was behind intense pressure placed on Citrix’s management team in 2015 and 2016, which resulted in Citrix making a last ditch attempt to sell itself as a single entity back in 2015.

In 2016 Citrix instead merged its GoTo unit with remote connectivity specialist LogMeIn.

Now under the terms of the current deal, Citrix shareholders will receive $104 in cash per share, a premium of 30 percent before market speculation began about Citrix’s fate on 7 December 2021.

Citrix is veteran of the IT industry having been founded in 1989, and made its name pioneering remote desktop access via Windows Server in the 1990s before expanding into the virtualisation market.

It acquisition by two private equity groups will result in Vista and Evergreen combining it with Tibco Software, one of Vista’s portfolio companies.

However, Citrix will continue to operate under the Citrix name and brand.

Tibco is a business intelligence and enterprise data management specialist, and the combination is being touted as a way to bring together Citrix’s secure digital workspace and application delivery suite with Tibco’s real-time intelligent data and analytics capabilities.

Tibco merger

The merger “will create one of the world’s largest software providers, serving 400,000 customers, including 98 percent of the Fortune 500, with 100 million users in 100 countries,” said the two firms.

“Over the past three decades, Citrix has established itself as the clear leader in secure hybrid work,” said Bob Calderoni, chair of the Citrix board of directors and Interim CEO and President.

Calderoni stepped into the role after David Henshall resigned as Citrix CEO in October 2021, amid disappointing sales and mounting pressure from Elliott Management.

“Our market-leading platform provides secure and reliable access to all of the applications and information employees need to get work done, wherever it needs to get done,” said Calderoni.

“By combining with Tibco, we will expand this platform and the outcomes our customers achieve,” said Calderoni. “Together with Tibco, we will be able to operate with greater scale and provide a larger customer base with a broader range of solutions to accelerate their digital transformations and enable them to deliver the future of hybrid work.”

“As a private company, we will have increased financial and strategic flexibility to invest in high-growth opportunities, such as DaaS, and accelerate its ongoing cloud transition,” Calderoni concluded.

“There has never been a better time to be in the business of connected intelligent analytics, and we’re thrilled to bring our industry-leading solutions to Citrix’s global customers,” added Dan Streetman, CEO of Tibco.

“The workplace has changed forever, and companies everywhere will require real-time access to faster, smarter insights from the increasingly large volumes of data available to them, their employees, and their ecosystems,” said Streetman.

Vista said that as a private company Citrix will have access to additional resources and support, as well as more flexibility to take advantage of strong secular tailwinds.

“We have long appreciated the mission-critical role that Citrix plays in keeping workforces connected,” said managing partner Jesse Cohn and Senior Portfolio Manager Jason Genrich on behalf of Evergreen and Elliott. “Having first invested in Citrix more than six years ago, we have a deep understanding of its unique strengths and significant potential as a private company.”

Added value

At least one analyst believes the deal will help Citrix transition its business model from one off licence fees, to cloud-based subscription services.

“The acquisition will likely simplify Citrix purchasing and help accelerate their move to subscription services. Many of Citrix’s customers are often interested in better business intelligence (BI) capabilities to help them understand ROI of Citrix investments, security threats, and employee productivity with their tools,” noted Forrester senior analyst Andrew Hewitt.

“There is a natural extension of having better visualization to maximise the impact of Citrix products,” said Hewitt. “The combination with Tibco should provide additional value to existing Citrix customers that often struggle to show the value of making EX-oriented investments.”

“Like many traditional software companies, Citrix is on a mighty journey to transition its legacy on-prem customers using perpetual licenses over to its cloud-based subscription services,” said Hewitt. “Both private equity firms have experience in this transition, so it should help Citrix accelerate its progress towards this goal so long as both firms actively invest in helping Citrix innovate.”