Citrix Systems Inc., a cloud services company based in Fort Lauderdale, Florida, has hired Goldman Sachs Group Inc. to explore potential buyout options, including private equity firms. This news caused the company’s stock to rise by 6.8 percent initially, although it gave back some gains the following day.
Citrix has been a key player in providing essential digital file access services for businesses for nearly three decades. While the company may not have the most advanced software, its offerings are crucial for businesses looking to enable remote work for their employees. This has made Citrix a steady source of income over the years.
A potential buyout of Citrix would come at a high price, with estimates placing the equity value at $14.9 billion and the overall transaction at $13.7 billion. Despite the significant cost, a buyout could be feasible if certain conditions are met.
In order for a successful buyout to occur, Citrix would need to attract interest from potential buyers, which it struggled to do in the past. Raising the necessary capital, which could amount to nearly $5 billion, would require the involvement of private equity firms, companies, sovereign investors, and pension funds.
Additionally, Citrix’s activist investor Elliott Management could play a role in a potential buyout by transferring its stake in the company. Bidders may also need to consider issuing preferred stock and securing debt financing to make the deal happen.
Citrix’s stable annual revenue of over $3 billion and healthy free cash flow margins make it an attractive target for private equity firms. The company’s track record of consistent performance further strengthens its appeal to potential buyers.
While an IPO for Citrix remains a possibility, private equity buyers may see greater potential for profit through a buyout. The success of a potential deal would serve as a litmus test for the readiness of the private equity market to undertake significant acquisitions in the technology sector.
Overall, Citrix’s exploration of a potential buyout represents a significant development in the technology industry and could signal a shift in the private equity landscape.
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https://www.datacenterknowledge.com/investing/citrix-tests-private-equity-s-appetite-for-megabuyouts