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Buyers Reportedly Working out Finances for Citrix (CTXS) Bid
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The buzz surrounding the takeover of Citrix Systems by Vista Equity Partners and Elliot Investment Management is getting louder.
According to Bloomberg, Elliot Investment Management and Vista Equity Partners are working with lenders including Bank of America (BAC - Free Report) to work out finances to acquire Citrix. There has been no official word on the matter from any of the involved parties.
Banks are working out a $14-billion financial package (bonds and loans) that will help Elliot Investment and Vista Equity to float a joint bid for Citrix. Citing sources related to the matter, the report added that Goldman Sachs Group and Credit Suisse Group are expected to lead the debt financing alongside Bank of America.
In addition to $14 billion of debt financing (inclusive of secured and unsecured debt), there may be another $2 billion of preferred equity included in the financial package, noted Bloomberg.
In December 2021, Bloomberg had reported that Citrix might receive a joint takeover bid from Vista Equity Partners and Elliot Investment Management. A few days back, Bloomberg reported that Elliot Investment and Vista Equity were holding “advanced talks” with Citrix regarding the buyout. If the takeover bid goes ahead, Vista is expected to use its portfolio company Tibco to merge with Citrix, noted Bloomberg.
What Troubles Citrix?
Citrix’s performance is being negatively impacted by the ongoing business transition to a subscription-based model. The transition is exerting pressure on Product and License revenues as well as Support and Services revenues.
Leveraged balance sheet is an added concern for the company. As of Sep 30, 2021, the company’s cash and cash equivalents and investments stood at $464 million. The long-term debt at the end of the quarter was $3.325 billion.
Earlier this year, Citrix announced that it was undertaking various changes to its sales organization as well as processes and go-to-market strategies in the second half of 2021 to boost its software as a service (SaaS) operations.
Citrix lowered its revenue outlook for the year due to the ongoing transition to the cloud and the negative impact of organizational changes. Revenues for 2021 are projected in the range of $3.19-$3.20 billion compared with the earlier guidance of $3.22-$3.25 billion.
Higher investments toward product development, amid increasing competition from Amazon’s (AMZN - Free Report) Amazon Web Services’ WorkSpaces and VMware's Workspace ONE, are likely to limit margin expansion at least in the near term.
In August 2021, VMWare rolled out new features to enable IT teams to manage VMware Horizon deployments across on-premises and cloud environments. VMware Horizon is a part of the company’s VMware Workspace ONE.
Citrix Systems is a leading provider of virtualization, networking and cloud computing solutions to more than 400,000 organizations worldwide. Citrix offers secure digital workspace technologies which are cloud-based and can be managed across both hybrid and multi-cloud infrastructures. The cloud-based approach enables customers to avail centralized control and SaaS-style updates in a cost-effective manner and reducing complexity.
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Buyers Reportedly Working out Finances for Citrix (CTXS) Bid
The buzz surrounding the takeover of Citrix Systems by Vista Equity Partners and Elliot Investment Management is getting louder.
According to Bloomberg, Elliot Investment Management and Vista Equity Partners are working with lenders including Bank of America (BAC - Free Report) to work out finances to acquire Citrix. There has been no official word on the matter from any of the involved parties.
Banks are working out a $14-billion financial package (bonds and loans) that will help Elliot Investment and Vista Equity to float a joint bid for Citrix. Citing sources related to the matter, the report added that Goldman Sachs Group and Credit Suisse Group are expected to lead the debt financing alongside Bank of America.
In addition to $14 billion of debt financing (inclusive of secured and unsecured debt), there may be another $2 billion of preferred equity included in the financial package, noted Bloomberg.
In December 2021, Bloomberg had reported that Citrix might receive a joint takeover bid from Vista Equity Partners and Elliot Investment Management. A few days back, Bloomberg reported that Elliot Investment and Vista Equity were holding “advanced talks” with Citrix regarding the buyout. If the takeover bid goes ahead, Vista is expected to use its portfolio company Tibco to merge with Citrix, noted Bloomberg.
What Troubles Citrix?
Citrix’s performance is being negatively impacted by the ongoing business transition to a subscription-based model. The transition is exerting pressure on Product and License revenues as well as Support and Services revenues.
Leveraged balance sheet is an added concern for the company. As of Sep 30, 2021, the company’s cash and cash equivalents and investments stood at $464 million. The long-term debt at the end of the quarter was $3.325 billion.
Earlier this year, Citrix announced that it was undertaking various changes to its sales organization as well as processes and go-to-market strategies in the second half of 2021 to boost its software as a service (SaaS) operations.
Citrix lowered its revenue outlook for the year due to the ongoing transition to the cloud and the negative impact of organizational changes. Revenues for 2021 are projected in the range of $3.19-$3.20 billion compared with the earlier guidance of $3.22-$3.25 billion.
Higher investments toward product development, amid increasing competition from Amazon’s (AMZN - Free Report) Amazon Web Services’ WorkSpaces and VMware's Workspace ONE, are likely to limit margin expansion at least in the near term.
In August 2021, VMWare rolled out new features to enable IT teams to manage VMware Horizon deployments across on-premises and cloud environments. VMware Horizon is a part of the company’s VMware Workspace ONE.
Citrix Systems is a leading provider of virtualization, networking and cloud computing solutions to more than 400,000 organizations worldwide. Citrix offers secure digital workspace technologies which are cloud-based and can be managed across both hybrid and multi-cloud infrastructures. The cloud-based approach enables customers to avail centralized control and SaaS-style updates in a cost-effective manner and reducing complexity.