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Citrix Systems Inc. is on the verge of becoming a private company again following sustained pressure from the activist investor Elliott Management Corp.

After a Sunday report in the Wall Street Journal today said Elliott’s private equity firm Evergreen Coast Capital and Vista Equity Partners are close to agreeing a $13 billion deal to buy the publicly traded software company, Citrix announced the deal Monday morning, but for a higher price: $16.5 billion.

Citrix sells software that enables workers to remotely access business applications and virtual desktops. The company also has a presence in several other parts of the enterprise technology market. For instance, it sells a project tracking platform that business teams use to keep track of outstanding tasks, as well as software tools that help information technology departments secure their firms’ business data and optimize networking infrastructure.

Under the agreement, Citrix shareholders will receive $104 a share in cash, about a 24% premium over the five-day average price as of Dec. 20, the last trading day before reports of a possible deal emerged. The deal is expected to close in mid-2022.

Vista and Evergreen plan to combine Citrix and enterprise data management firm Tibco Software, which Vista already has in its portfolio. The combination, Citrix said, “brings together Citrix’s secure digital workspace and application delivery suite with Tibcos real-time intelligent data and analytics capabilities to empower customers and users with the secure application and information access and insights they need to accelerate digital transformation and navigate the hybrid workplace.”

The deal will create what Citrix says is one of the world’s largest software providers, serving 400,000 customers, with 100 million users in 100 countries. The aim is to “accelerate Citrix’s defined growth strategy and SaaS transition. “By combining with TIBCO, we will expand this platform and the outcomes our customers achieve,” Bob Calderoni, president and interim chief executive of Citrix, said in a statement. “Together with Tibco, we will be able to operate with greater scale and provide a larger customer base with a broader range of solutions to accelerate their digital transformations and enable them to deliver the future of hybrid work. As a private company, we will have increased financial and strategic flexibility to invest in high-growth opportunities, such as DaaS, and accelerate its ongoing cloud transition.”

Like many legacy software companies, Citrix has struggled with the transition to a subscription-based business model and though it has had a boost recently thanks to the COVID-19 pandemic, investors such as Elliott believe the company continues to underperform.

Elliott has felt that way for quite a while. The activist investor, which has a history of buying sizable stakes in tech firms and agitating for change to make them more profitable, first bought shares in Citrix in 2015.

It expanded its stake in the company considerably last September, spending $1.3 billion to acquire more than 10% of its shares. Since then, Elliott has pushed for a number of changes, resulting in David Henshall stepping down as Citrix’s president and chief executive officer in October. The company then hired Chairman Calderoni as its interim CEO.

Elliott, which is best known for its efforts to disrupt Dell Technologies Inc.’s $67 billion acquisition of EMC Corp. in 2016, has acquired a number of other companies in the past after previously acquiring a stake in them. The most notable example is Athenahealth Inc., which Elliott and Veritas Capital acquired in 2018. They finally agreed to sell the company in September.

“Elliott and Vista are combining two former innovation leaders that have lost their way and are trying to get back on track,” said analyst Holger Mueller of Constellation Research Inc. “It’s good timing as both companies still command a big market share, but time is of the essence because enterprises won’t wait for too long for the combination to deliver value to them, first and foremost in the future of work and secondly in the infrastructure area.”

Citrix also reported its fourth-quarter earnings today. It earned a net profit of $103 million, or 81 cents a share, down from $112 million, or 89 cents a share, a year ago. Profit includes restructuring charges of $103 million for severance and facility closing costs and a $120 million income tax benefit related to the finalization of transitional tax relief in accordance with the enactment of federal tax reform in Switzerland.

Revenue for the quarter rose 5%, to $851 million. For the fiscal year, Citrix reported revenue of $3.22 billion, down 1% from 2020.

With reporting from Robert Hof

Photo: Citrix