Citrix Shareholders Approve $16.5 Billion Private Equity Buyout, Joining Tibco

Citrix shareholders have approved the $16.5 billion offer by a group of private equity investors announced in January. Now, a vote approving the deal, announced Thursday, comes despite an investor lawsuit seeking documentation that Citrix considered alternative options.

The deal is still on schedule to close by midyear, pending approvals and typical closing conditions according to Citrix. But the Citrix shareholder vote comes amid a continued surge of longtime Citrix employee and executive departures. Among them is Citrix channel chief Mark Palomba, who just assumed that role six months ago.

Citrix’s Mark Palomba

Palomba, a former SAP executive, joined Citrix two years ago as COO for sales and services. Citrix last fall tapped Palomba to replace former channel chief Bronwyn Hastings, who left months earlier to join Google Cloud. A Citrix spokeswoman, who confirmed Palomba’s planned departure, said his final day has not yet been determined.

Citrix also hasn’t said who will replace Palomba. A seemingly logical candidate could be Tony Beller, Tibco’s channel chief. The investors acquiring Citrix, Vista Equity Partners and Evergreen Coast Capital, Elliott Management’s private equity arm, have said they plan to combine Citrix with Tibco. Vista acquired Tibco in 2014. Last year, Tibco also acquired Information Builders.

Beller, who joined Tibco nearly two years ago, has led partner programs and alliances at ServiceNow, Salesforce and Anaplan. Neither Citrix nor Tibco has pointed to Beller having a potential role in the Citrix partner program. But once the deal closes, he will be the combined company’s top channel and ecosystem leader. Since the companies have not revealed to what extent they will become a single business, it is also possible Beller won’t have a role with Citrix.

But Beller is a veteran channel executive, and no stranger to dealing with mergers and acquisition. Last year he addressed the topic with advice in a Channel Futures guest post. Companies that merge often neglect to communicate as well with their channel ecosystem as they do with investors and staff, he noted.

“Forthright and upfront communication needs to be delivered immediately,” he wrote. “Your business has agreed to purchase another because its solutions add value to yours, they expand your portfolio or grow your customer base.”

Combining Citrix and Tibco

Nevertheless, the combination of Citrix and Tibco is puzzlingfor many observers. Citrix provides virtual desktop management software, while Tibco is a business intelligence and data management provider. Jack Gold, president, and principal analyst of J. Gold Associates is among those skeptical of bringing Citrix and Tibco together.

J. Gold Associates’ Jack Gold

“Frankly, I am not sure how combining with Tibco will help them,” Gold said. Tibco is not really in the same business area, and it might be a stretch to get it integrated. It may also appeal to a different customer base, particularly at Citrix tries to move from an IT sales focus to more of an end user orientation for line of business users.”

But Citrix executive VP for business strategy Tim Minahan is bullish on the combination. Bringing Citrix and Tibco will be “a game changer” in the desktop as-a-service (DaaS) market, Minahan said, when announcing the deal in January.

“While I am positive on Citrix going private and for what it can do for their long-term strategy, I am concerned that the private equity may be forcing a merger of two properties that may not be fully complimentary,” Gold added. “And the loss of some key execs is also concerning. But overall, I do think Citrix can pull itself together and re-emerge stronger, assuming it takes the right steps.”

Shareholder Lawsuit

On the eve of the shareholder vote, two investors on Wednesday filed a lawsuit in Delaware Chancery court. The complaint alleges a “potentially conflicted and flawed strategic process” by Elliott Management, which owned 10% of Citrix shares. Plaintiffs Mark Liebenthal and Pablo Legorreta are seeking a “full and complete disclosure of all material information necessary for shareholders to decide whether to vote in favor of the merger,” Law360 reported on Wednesday.

In the lawsuit, according to Law360, Liebenthal and Legorreta are seeking to review Citrix’s “books and records” to ascertain whether management or the board had personal interests in agreeing to the deal. Terms of the transaction call for Vista Equity Partners and Elliott Management’s private equity subsidiary Evergreen Coast Capital to acquire Citrix for $104 per share. That is a 24% premium above the closing price on Dec. 20 when rumors of this deal first surfaced.