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September 23, 2015

Sale to Dell? Citrix investors push for change – report

Virtualisation company embarked on a operational review in July.

By Alexander Sword

Cloud computing company Citrix is reportedly looking for a buyer for the whole business before embarking on asset sales.

The virtualisation giant has approached buyout firms as well as other technology companies such as Dell, according to a report in Reuters.

The move comes following Citrix’s statement in July that it would review "strategic alternatives" for its GoTo family of products. This could include a sale or spin-off.

Reuters reports that Citrix will also look to sell other divisions of its business if it cannot find a buyer for the company as a whole. Earlier this year, Citrix engaged a financial advisor to provide advice for a potential sale of its ByteMobile business.

Hedge fund Elliott Management, which owns 7.5 percent of the company’s common stock, has been agitating for change within the company, including through putting senior partner Jesse Cohn on its board in July.

At the same time, "a comprehensive operational review focusing on improving Citrix’s margins, profitability and capital structure" was announced.

Rob Bamforth, Principal Analyst at Quocirca, comments that the buy could make an "intriguing combination" due to the companies’ complementary strengths.

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"On the one hand you have a company that formed out of supplying desktops and laptops to people and enterprises. On the other you have a leading desktop or edge virtual platform.

"They have partnered before and have already got that relationship.

"When you look at where Dell was and where it’s come through you almost wouldn’t put anything past them; it’s good at embracing what it can when it needs to."

Leif-Olof Wallin, Research Vice President at Gartner, said that Citrix might be exploring an acquisition but argued that it was not a goal:

"I don’t think it’s part of their long term strategy to get acquired, but they are a publicly traded company so they have a responsibility to the shareholders to evaluate any type of proposal seriously. Citrix has enough runway and product roadmap to stay on as a separate company for many years to come.

"True, Mark [CEO Mark Templeton] is set on retirement, they’ve already brought him out of retirement once but this time I think it’s a real change of management coming. The Exec team behind Mark has been extended to meet the challenge so I don’t really see a problem there.

"Having an activist on the board is in my mind is more of a "receipt" that the company is successful enough to warrant the attention of these types of activities."

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