Vista to Acquire Citrix Systems for $16.5 Billion and Combine It with Tibco

A leveraged buyout of Citrix Systems will bring the company together with data integration and analytics provider Tibco. Citrix revealed Monday it has agreed to be acquired by Tibco portfolio company Vista Equity Partners for $16.5 billion. Evergreen Coast Capital, the private equity arm of Elliott Management, is also part of the deal.

The acquisition, which should close in the second half of this year, will take the company private. Citrix Systems executive VP of business strategy Tim Minahan said that combining with Tibco will be “a game changer” in the desktop as-a-service (DaaS) market.

Bringing the companies together will let Citrix combine Tibco’s “connected intelligence” technology with its digital workspace platform, according to Minahan. The combined company create a software giant with 400,000 customers, including 98% of the Fortune 500, according to Citrix.

Citrix board chairman and interim CEO Bob Calderoni added that combining the two companies’ platforms will help achieve improved hybrid work solutions.

Citrix’s Bob 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,” Calderoni said.

Seeking DaaS Growth

As a private company, Citrix Systems will have more flexibility to acquire DaaS technologies and accelerate its cloud transition, Calderoni added. Citrix has taken more aggressive steps to transition its existing premises-based VDI customers to the cloud in recent years. But critics complain those efforts haven’t gained the momentum of other software providers in transitioning its customers from perpetual licenses to recurring revenue.

Citrix’s growth in 2021 was flat. The company, which also reported fourth-quarter and full-year fiscal year 2021 financial results on Monday, said annual revenues last year of $3.22 billion fell 1% from its 2020 revenues of $3.24 billion.

Citrix started signaling last fall that it is weighing various strategic options including an outright sale of the company. Speculation of a potential deal has intensified in recent weeks. An agreement appeared even closer last week when Bloomberg reported that Elliott Management and Vista were arranging loans and bonds. Lenders involved in providing funds to finance the Citrix buyout include Bank of America, Credit Suisse and Goldman Sachs.

Under terms of the deal, Citrix shareholders will get $104 per share in cash, slightly less than the company’s closing share price of $105.55 on Friday. But according to Citrix, the price is a 30% premium over its unaffected share price.

Citrix’s share price has risen in recent months amid the rumors that a deal was in the works. Elliott Management has been accruing shares in Citrix for some time. In October, the investment of $1 billion gave it a 10% stake.

Citrix CEO David Henshall then stepped down, with Calderoni taking over as interim CEO. At the time, the company indicated it was reviewing strategic options. Since then, Citrix has laid off numerous employees, according to several reports. Employees started exiting Citrix in November; for example, 50 employees in Raleigh, North Carolina, were let go, as well as 80 in its Santa Clara, California, office.

Windows Virtual Desktop Pioneer

Despite its recent challenges, Citrix emerged as a small startup in 1989 to one of the of the early influential providers of Windows terminal services. Cross-licensing deals benefited both Citrix and Microsoft from the beginning.

Meanwhile, Citrix and its key rival in the VDI market, VMware, have faced intense competition from pure cloud-native desktop as-a-service (DaaS) providers. Among them: Cameyo, Nerdio, Tehama, Nutanix and Workspot. There’s also growing interest in Amazon WorkSpaces and Microsoft’s Azure Virtual Desktop (AVD), as well as Windows 365.

Early in the pandemic, Citrix benefited from demand for its traditional Citrix Virtual Apps and Desktops licenses. While the Citrix Workspace cloud services can enhance Microsoft AVD and Windows 365, so can the cloud-native providers.

Nerdio’s Joseph Landes

“Every single meeting that we have with an enterprise customer is about leaving Citrix or VMware,” Nerdio chief revenue officer Joseph Landes told Channel Futures earlier this month.

Nerdio recently said it is expanding its partner base to address increasing demand.

“We see a ton of customers wanting to come over from Citrix to native Azure Virtual Desktop, and it’s not like this happens once a week or once a month. It’s every day,” said Landes.