Will the Citrix-Tibco merger create business magic? Vista clearly thinks so – Techdoxx

Deepak Gupta February 1, 2022
Updated 2022/02/01 at 12:22 AM

Private equity companies Vista Equity Partners and Evergreen Coast Capital have finally found a suitable match for Tibco: the companies will buy Citrix for $16.5 billion.

The deal, which represents a premium of approximately 30% to the value of Citrix, aims to combine the two companies to create a legacy enterprise technology powerhouse. But will the combination produce something more useful to customers or a conglomerate that doesn’t really fit together?

Citrix is ​​best known for its desktop virtualization products, and it would be fair to assume that it did pretty well when the pandemic hit and companies had to shift employees to remote work. Having the ability to provide work desktops in a single package for workers at home seems to be a nice feature in the last couple of years.

It’s all about execution, and we’ll see in a few months whether Vista and Elliott are pursuing a forward-growth strategy, or whether they’ll save costs and milk the installed base. Holger Mueller

But it hasn’t been tearing up the score with growth lately. Your public company status gives us visibility into your financial performance (including your mediocre earnings report released today) and, as we’ll see, its weak growth likely makes it more of a takeover target.

New Citrix partner Tibco provides tools and infrastructure to manage and analyze data. But it was launched in 1997 and the analytics market has evolved dramatically since then. There’s also a lot more competition and more data to manage thanks to the market shift to machine learning. Tibco had to find a way to change with its market, having been born in the era of free AOL CDs.

Citrix was founded in 1989, long before the cloud changed the way companies delivered software and many years before companies shifted to subscription-based revenue models. Both companies have had to drastically change their approach to the way they do business in recent years.

We don’t have much data on Tibco, but we know that Vista was looking for a buyer for the company, which bought for $4.3 billion in 2014.

It’s hard to know what happened to that, but we now know that Vista decided to create a much larger company to provide two seemingly different sets of services — virtualization and data analytics.

Can these two companies combine to make something better?

A look at Citrix finances

While we no longer have windows into Tibco’s finances, Citrix’s latest earnings results show a slow-growing company in the midst of a transition to subscription pricing and away from support revenues.

In the fourth quarter of fiscal 2021, Citrix generated revenue of $851 million, but that revenue was up just 5% over the previous year. The company’s profit dropped slightly, however, to $112.1 million, but as the quarter included restructuring expenses and a huge tax break, it’s difficult to compare results directly.

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