Citrix in Deal to Merge GoTo Business With LogMeIn -- Update
July 26 2016 - 4:59PM
Dow Jones News
By Liz Hoffman and Dana Cimilluca
Citrix Systems Inc. struck a deal to merge its virtual-meeting
division with LogMeIn Inc., a transaction that would beef up a
business Citrix was already planning to spin off.
The deal is to be structured as a so-called Reverse Morris
Trust, a tax-free transaction that has been popular of late as
companies look to slim down and become more focused.
The deal values LogMeIn at a slight premium to its market value
Tuesday afternoon of $1.7 billion. Fort Lauderdale, Fla.-based
Citrix had already said it would spin off the business, known as
GoTo, in a tax-free deal in the second half of the year.
GoTo's software allows users to connect to business meetings
from various devices, among other functions. It had revenue of
about $600 million in the 12 months ended September. Boston-based
LogMeIn also makes software that allows users to collaborate
remotely. Its annual revenue, which comes mostly from
subscriptions, has roughly doubled since 2012 and came in at $272
million last year.
Last fall, Citrix announced plans to spin off the GoTo business
and to cut about 1,000 jobs. The moves came after activist investor
Elliott Management Corp. called for changes at the software
firm.
Elliott had urged Citrix, which has a market value of about $14
billion, to slim down by selling assets and cutting costs. It also
suggested Citrix could sell or spin off some of its businesses,
among other options.
Last summer, Citrix gave Elliot executive Jesse Cohn a board
seat and placed him on a newly formed committee to focus on
improving Citrix's profitability.
Reverse Morris Trust deals are tricky to accomplish but
financially attractive as they combine merits of spinoffs and
mergers.
Hewlett Packard Enterprise Co. last month struck a Reverse
Morris Trust deal to spin out its technology-services operations
and merge them with Computer Sciences Corp. Lockheed Martin Corp.
is using one to shed its information-systems unit, combining it
with Leidos Holdings Inc., whose investors will own 49.5% of the
combined company.
Write to Liz Hoffman at liz.hoffman@wsj.com and Dana Cimilluca
at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
July 26, 2016 16:44 ET (20:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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