Citrix struck a $16.5 billion deal to be acquired by two private equity firms and have its assets combined with those of enterprise data management company Tibco, a move which will create a software-as-a-service (SaaS) behemoth with more than 400,000 customers.
The company will be taken private by Vista Equity Partners and Evergreen Coast Capital (an affiliate of Elliott Investment Management), which will pay Citrix investors $104 per share in cash. The deal has already been approved by Citrix’s board of directors and is expected to close in the middle of this year.
Once the transaction is complete, the private equity firms plan to marry Citrix and Tibco, the latter of which is already owned by Vista. Citrix noted in a press release that tie up will create “one of the world’s largest software providers” with 100 million users in 100 countries.
Citrix provides digital workspace technologies as well as networking products like SD-WAN and cloud-delivered security capabilities. Tibco supplies real-time data analytics for enterprises via its Connected Intelligence platform.
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Bob Calderoni, Citrix board chair and interim CEO, said in a statement it decided to pursue the deal after a five-month strategic review process which saw it reach out to both potential financial and strategic buyers.
“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,” Calderoni said. “As a private company, we will have increased financial and strategic flexibility to invest in high-growth opportunities, such as DaaS [desktop as a service], and accelerate its ongoing cloud transition.”
Analyst response
Scott Raynovich, founder and principal analyst at Futuriom, and Zeus Kerravala, founder and principal analyst at ZK Research, both told Fierce the move is a good one for Citrix, with the former calling it “the right move at the right time” to re-focus the company.
Kerravala explained Citrix has a large install base, “but needs to transition its business model to SaaS and subscription.”
“It’s been unable to do that as a publicly traded company as it's had to meet shareholder expectations, which is akin to changing the wings on a plane while it's flying,” he said. “The company should have had a stronger past two years as COVID should have given its VDI/DaaS and SD-WAN businesses a kick start, but it didn't, which indicates execution issues. Going private lets Citrix reset, make the necessary changes and likely bring in new management.”
Roy Chua, founder and principal at AvidThink, told Fierce Citrix and Tibco’s customer bases are “adjacent but limited in overlap,” adding his firm will be “watching to see how they intend to provide joint go-to-markets for the combined solutions portfolio.”
Chua said it's possible that the combination of Tibco with Citrix could “rejuvenate” the SD-WAN space, but added “I think there might be more opportunity if Citrix's technology was combined with Tibco's products for wide-area data transfer, IoT and Edge use cases.”
Meanwhile, Raynovich tipped the tie up process to “include product rationalization in the SASE and SD-WAN markets, which will be re-evaluated as Citrix has recently been quiet in these spaces, as competition is increasing.”
Q4 results
The acquisition announcement came as Citrix released its Q4 2021 earnings report. It posted revenue of $851 million for the quarter, which was up 5% year on year from $810 million. Net income dipped from $112 million in Q4 2020 to $103 million, though the company noted this year’s total included $103 million in severance and facility closing costs as well as a $120 million tax benefit.
Citrix canceled its scheduled earnings call in light of the deal announcement.