Evergreen Coast Capital Corp. and Vista Equity Partners, the parent company of analytics vendor Tibco, said they will combine Citrix and Tibco upon completion of the acquisition of Citrix for $16.5 billion in cash.
Citrix, founded in 1989 and based in Fort Lauderdale, Fla., provides digital workspace technology that enables organizations to secure, manage and monitor a host of different technologies.
The vendor says it has more than 400,000 customers with about 100 million users worldwide.
Tibco, meanwhile, is a data management and analytics vendor founded in 1997 and based in Palo Alto, Calif. Vista acquired Tibco in 2014 for $4.3 billion and took it private at the time.
Evergreen and Vista's acquisition of Citrix, revealed Tuesday, is expected to close in mid-2022.
Once Tibco and Citrix are combined, the merger will join Citrix's secure digital workspace and application delivery platform with Tibco's data management and analytics capabilities.
Dan Streetman, CEO of Tibco, noted in a release that the acquisition of Citrix stems in part from the changing nature of the workforce, with many more people now working from home due to the COVID-19 pandemic.
The biggest benefit for Tibco, however, may be access to Citrix's customer base, according to Doug Henschen, an analyst at Constellation Research.
Doug HenschenAnalyst, Constellation Research
"It's certainly a novel combination, but Tibco is already managing multiple product lines that, in many cases, address very different use cases," he said. "The most obvious benefit of the merger is potential sales synergy, whereby Tibco will suddenly have a foot in the door at Citrix's whopping 400,000-plus customers."
Beyond customer growth, and despite seemingly addressing completely different needs, there are technological synergies between Tibco and Citrix, Henschen added.
Tibco operates three interconnected portfolios that combine to create what the vendor calls Hyperconverged Analytics. Its Predict portfolio includes its business intelligence suite, while the Connect portfolio is made up of its cloud capabilities and the Unify portfolio addresses data management.
According to Henschen, Citrix can complement Tibco's Predict portfolio, in particular.
"Citrix offers analytics into security and networks, and these often complement insights into customers, transactions and what's going on with enterprise applications and customer experiences," he said. "IT-centric analytics and business-centric analytics are often separate silos today, but there's an opportunity and early signs that these worlds are coming closer together."
In addition, there's potential for Citrix to complement Tibco's Connect portfolio, but that could be more difficult, Henschen added.
"Data integration and data management synergies also present possibilities, but we've seen failed attempts to combine these two worlds before." he said.
In fact, one failed attempt involved Citrix competitor Cisco, according to Henschen. Cisco acquired Composite Software in 2013 but the integration didn't work out. Cisco eventually sold Composite Software to Tibco, which subsequently turned Composite Software into Tibco Data Virtualization.
"The lesson here for Citrix and Tibco is that synergies may take time to develop, so there has to be a commitment to develop and see them through," Henschen said.
Similarly, Donald Farmer, founder and principal of TreeHive Strategy, said it could take some time for the benefits of the merger to materialize.
"The acquisition of Citrix does make some sense, but I think there will be a lot of work needed to bring about any significant transformation," he said. "Citrix is an old company in technology terms, and although the pandemic has brought it some new customers, it has struggled to come to terms with cloud."
The worry, therefore, is that Tibco's own progress could be stalled as it works to help Citrix modernize, Farmer continued.
"For me, the [question] is if Tibco will help Citrix through this process, and will a larger, better, more complete enterprise stack emerge at the other end?" he said. "In that case, Citrix would make Tibco's Unify pillar more comprehensive. The danger is that transforming Citrix -- or waiting for it to be transformed -- may hold back Tibco's current progress."
Meanwhile, as Tibco and Citrix join forces, Henschen said he expects Vista, their parent company, to find ways to trim costs.
"I wouldn't discount economies of scale and the opportunity -- typically pursued by private equity firms -- to seek cost efficiencies and reduce general and administrative expenses through this merger," he said. "That's often the real driver behind private equity deals."
According to the terms of the acquisition, Citrix shareholders will receive $104 per share. That's a premium of 30% over its five-day volume-weighted average per share as of Dec. 7, 2021, the last day of trading before market speculation began about a potential deal.
The acquisition has been unanimously approved by Citrix's board of directors but remains subject to approval by the company's shareholders and regulatory approval. If completed, Citrix stock will cease trading on the Nasdaq Exchange and the company will go private.
Despite becoming a subsidiary of Vista -- a global investment firm with more than $86 billion in assets under management as of Sept. 30 -- and combining with Tibco, Citrix will continue to operate under the Citrix name and brand. Its headquarters will remain in Ft. Lauderdale.
Vista's agreement to acquire Citrix comes four months after it reached an agreement to acquire robotic process automation vendor Blue Prism for $1.5 billion and roll it into Tibco. That deal failed to materialize, however, when Vista's bid was exceeded by SS&C Technologies and the firm chose not to counter with a higher offer.
Historically, Tibco has completed more than 30 acquisition, including its 2020 purchase of IBI, formerly known as Information Builders. Perhaps most significantly, Tibco acquired Spotfire in 2007 and has since made Spotfire the foundation of its business intelligence platform and one of the cornerstones of its Predict portfolio.