A major score for Elliott Management
Networking software provider Citrix Systems (CTXS) has been the subject of several buyout rumors. Recent industry reports have indicated that several private equity firms have submitted bids for the company.
If Citrix Systems ends up selling itself as rumored, it would a victory for activist investor Paul Singer, the founder of Elliott Management. In 2015, Singer’s hedge fund successfully convinced Citrix Systems to adopt its proposal that included adding Jesse Cohn, a partner with Elliott Management, to Citrix Systems’ board. Plus, Mark Templeton, the CEO of Citrix at that time, agreed to step down.
GoTo spin-off in a $1.8 billion deal
Soon after its management shakeup, Citrix Systems began exploring a spin-off or sale of GoTo, its collaboration and video conference business. It eventually merged the business with LogMeIn (LOGM) earlier this year in a transaction valued at $1.8 billion. GoTo is a competitor of Amazon’s (AMZN) Chime, Cisco Systems’ (CSCO) WebEx, and Microsoft’s (MSFT) Skype for Business in the unified communication platform market.
In its first quarterly report since it spun off GoTo, Citrix Systems (CTXS) posted 1Q17 earnings per share (or EPS) of $0.97, topping the consensus estimate of $0.95. However, its revenues of $662.7 million came in below the consensus estimate of $664.4 million.
Potential buyers of Citrix Systems
Eliminating GoTo was meant to allow Citrix Systems (CTXS) to concentrate on its core operations. As it turns out, it seems the move to remove the conferencing business also increased the appeal of Citrix as a buyout asset.
According to a Bloomberg report, private equity firms Thoma Bravo, Bain Capital, and the Carlyle Group LP are among the potential buyers running the numbers on Citrix Systems.