(Bloomberg) — Elliott Investment Management, and Vista Equity Partners agreed to acquire software maker Citrix Systems Inc. for $13 billion, marking the first big leveraged buyout of the year.
Vista and Elliott’s private equity arm, Evergreen Coast Capital Corp., are paying $104 per share in cash, according to a statement from the companies on Monday, confirming an earlier report by Bloomberg News. The offer is a 30% premium to the company’s closing share price on Dec. 7, before market speculation emerged about a deal. Bloomberg News first reported on a potential agreement with Vista and Elliot on Dec. 20.
Citrix shares were down about 3.8% to $101.54 at 12:24 p.m. Monday in New York, giving the company a market value of about $12.7 billion. The stock had closed at $105.55 on Friday.
Fort Lauderdale, Florida-based Citrix makes software that workers use to log onto to their corporate programs virtually, a category of product extensively relied upon during the pandemic as businesses sought quick ways to keep remote workforces connected to central operations. Many are now planning permanent hybrid setups for home and office working, which is expected to grow the market for tools that help make this seamless.
As part of the transaction, Vista and Evergreen plan to combine Citrix with Tibco Software, an enterprise data management firm that’s one of Vista’s portfolio companies. The combination will create one of the world’s largest software providers, serving 400,000 customers, according to the statement.
Read more: Citrix deal caps the biggest start for tech M&A in more than two decades
The Citrix agreement caps the biggest-ever month for software deals and follows a rampant year in which private equity firms and strategic buyers chased targets. The value of transactions in the sector hit a record $674 billion in 2021, almost double the previous annual high, data compiled by Bloomberg show. Values are up 144% this year, driven by Microsoft Corp.’s mammoth $69 billion takeover of video game publisher Activision Blizzard Inc., the data show.
Citrix previously tried to sell itself in 2017 only to see discussions with potential buyers, including Bain Capital and Thoma Bravo, stall over valuation, people familiar with the matter said at the time.
Citrix’s most recent sale considerations came as Elliott took another stake in the company last year. It’s the second time Elliott has been involved with Citrix. Elliott disclosed a stake in the company in 2015, arguing at the time that it was suffering from poor execution and management and needed to simplify its business after a misguided buying spree. As part of a settlement that year, Jesse Cohn, an Elliott partner, joined the Citrix board, where he remained until 2020.
Elliott also acquired some of Citrix’s assets that were spun off and merged with LogMeIn Inc., a company the hedge fund purchased with Francisco Partners in 2019.
The deal values Citrix at about 24.8 times its trailing 12-month earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That’s just a little below the median 25.8-times Ebitda paid for similar legacy tech companies over the past five years, the data show.
“Given Citrix faces a tough business-model transition, the company may have garnered a full valuation from Elliott and Vista,” Bloomberg Intelligence senior analyst Woo Jin Ho wrote in a note Monday. “Yet Elliott and Vista’s acquisition also implies limited interest from larger, publicly held suitors.”
Qatalyst Partners is serving as financial adviser to Citrix. Bank of America Corp., Barclays Plc, Citigroup Inc., Credit Suisse Group AG, Goldman Sachs Group Inc., Lazard Ltd. and Mizuho Financial Group Inc. are serving as financial advisers to Vista and Evergreen.
(Updates with share price in paragraph three, additional details in paragraph nine)
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