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Citrix Systems, one of a growing number of tech vendors to spark the interest of activist investor Elliott Management, reportedly is scrambling to find a buyer before it’s forced to sell off its assets.
Citing unnamed sources familiar with the situation, Reuters reported that officials with Citrix, which has a market capitalization of $11.6 billion, are meeting with buyout firms and have talked with other tech vendors—including Dell—to try to find a company that will buy it rather than having to shed businesses.
The moves come two months after Citrix President and CEO Mark Templeton announced in July that he would retire once a replacement was found and officials said they would review what to do with the company’s GoTo online collaboration portfolio of products. At the same time, Citrix announced it was appointing an Elliott representative to the board of directors and would search for other independent board members who met with Elliott’s approval.
Reuters’ sources told the news site that before starting a sales process for the GoTo products—which includes the GoToMeeting video and Web conferencing service—Citrix wanted to determine whether it could find a suitable buyer for the entire company. Should that effort fail, Citrix officials will not only have to shed the GoTo businesses, but also will have to look at options for other assets, the sources said.
Officials with Citrix, Dell and Silver Lake Partners—which helped Michael Dell take his company private in 2013 in a $25 billion buyout—have declined to comment to the media.
Hedge fund Elliott Management has invested heavily in a growing array of tech companies—including EMC, Juniper Networks and Riverbed Technology—over the past several years. The firm has become a major shareholder in each company, and then used that leverage to try to force changes that Elliott officials have said would improve the businesses and return more money to investors.
That has included putting pressure on EMC to sell or spin off VMware and to disband its federated management strategy, and forcing Juniper to restructure by shedding businesses, slash costs, reduce R&D spending and return $3 billion to shareholders. Riverbed eventually was sold to equity firms after executives instituted a cost-reduction plan.
Elliott officials have been similarly critical of Citrix, saying the collaboration and networking company has underperformed and is undervalued. In the second quarter, Citrix saw 2 percent year-to-year growth in revenue, hitting $797 million, and net income of $103 million, almost doubling the $53 million from the same period in 2014.
Jesse Cohn, Elliott’s representative on the board, said in a statement at the time the financial numbers and corporate changes were announced that his firm “first invested in Citrix because we saw a substantial value creation opportunity for the company and its shareholders. We are confident that the initiatives announced today and the addition of new directors to the company’s board will allow Citrix to build upon its position as an innovative industry leader, and to drive significant shareholder value.”
Along with exploring options for the GoTo products, Elliott reportedly also encouraged Citrix to consider selling its Netscaler business, which helps customers improve the performance of their Web-based applications. In addition, Citrix officials earlier this month said the company would buy back as much as another $500 million of stock.