Thread regarding Citrix Systems Inc. layoffs

Deal most likely is dead on arrival according to the internet news media expert accredited professional bloggers.

The deal is not dead, don't be an id--t.

The deal is dead, nobody wants to touch this pile of stinky sh-t.

I hope the insider who is making comments is right, for the sake of the lucky shareholders who will be retaining their profit on what would otherwise be a $50-60 stock today.

The Q2 results indeed showed P&L margin expansion because of reductions in R&D and SG&A, not any material change in the business itself. There will be more of that to pretty up the place- the question will be the long-term impact of the R&D reductions when DaaS is being rocked in its foundations by MSFT, with evidence of layoffs and aggressive pricing across the whole VDI/DaaS ecosystem.

I am doubtful of the institutional selling. Apart from the PE firms themselves, most are passive investors (some are even index funds) who would not want to rock the boat with short-selling or dumping of the stock and then getting on the cross hairs of two of the largest PE's in the business.

Yes, hiring Tom Krause at this junction is a positive that would seem to indicate there will be a deal. It does not indicate a deal at the current price. In fact, it likely indicates the onboarding of a savvy negotiator and intermediary (remember, his bosses are the PE, not the shareholders) to help navigate the complexity of a renegotiation. It helps Tom, with the largest compensation in the new company if the price is low as his ultimate compensation will be based on MOIC (multiple of invested capital) when the exit happens. A transaction today at $60 sure would make that MOIC look more like a 3 that a 1.5X- a lot sweeter at some exit in the future. Any he wont cry a bit if the insiders with big $$ take a haircut today.

I do agree that the deal will not fall apart. This would set a bad precedent for PE and sully their reputation. At the same time, having a low MOIC asset totaling $16B will be a ho-e big enough to pass a truck through in the respective funds- a career limiting move in PE. So again, look for a negotiated price adjustment, of some sorts, to make the deal palatable in this new context.

The deal will go through guys. The debt has already been underwritten by Bank of America, Goldman Sachs, and Credit Suisse. The Material Adverse Clause referenced below impacts Vista and Elliott and not the banks themselves as the debt is already agreed upon. If the deal were to be opened up, it would require the approval of the shareholders. The shareholders, which are largely institutional, will NOT agree to reopen the deal because it would mean that they would lose billions of dollars if the price resets to account for today’s market conditions. The one scenario that could happen is Vista and Elliott deciding to pay the $800 million breakup clause and backing out. Yet, this would result in multi million $ lawsuits coming their way, and which Vista and Elliott will most definitely not want. Plus think about it this way, if there were any indications that the deal will not close, there would be some sizeable short selling of the stock by institutionals. There is no such case as short selling as of today is only 4%. Furthermore, Vista and Elliott would not have agreed to hire Tom Krause as the new CEO of they were planning on reopening the deal. This is the case as I am sure Tom has some built in golden parachute if the deal doesn’t go through. As a result, it is very unlikely that the deal will not close. Looking even at our financials, revenue is still growing and our margins are improving based on the Q2 financials. So it is very unlikely that Vista and Elliott jump ship at this stage.

Deal probably isn't going through.

It is naive to think that in such extraordinary market conditions, the agreement is going to hold as is. No one was expecting the turn of the market on a dime, from not being able to hire enough people, to implementing hiring freezes in a matter of weeks.

There is enough slack in the Merger Agreement, Company Material Adverse Effect section, especially clauses C and D, for both global financial and market condition changes that the buyer can use these to revisit the agreement. Just the Microsoft cloud business miss and aggressive pricing for AVD will likely be a material impact once it becomes more visible.

With all of this tightening, the Q3 business results will likely show impact on new subscription bookings and renewals (maybe not revenue since the business is subscriptions booked before so that drop will lag). With last close date of Oct 31, Elliott would be waiting to see the end of Sept results to find that material impact indicator!

The transaction is not subject to a financing condition according to the merger agreement and the press release issued when the transaction was approved by the shareholders. Therefore, the sale of the notes by the banks in a secondary market is the banks’ issue and legally cannot impact the close.

Reading this is pure schadenfreude... LMFAO...

Until a loan is issued, it is not. Those banks are seeing huge face value reductions on the loans they "committed" to as they are unable to obtain commitments to sell them off in the secondary market.

The cash has not yet left the bank. If they refuse to fund the loans, what is the PE or Citrix going to do? Sue? And drag this out for 6 months? Unlikely. Vista and Elliott are very likely looking at negotiating the buy price and are using this loan signal as a hint to the shareholders that the price is not $104. These guys are the sharpest and most wicked financiers around- they are not going to pay a 100% premium on what is a degraded asset.

It would be cheaper for them to write off the break-up fee of ~$700M, let the price drop like a rock, and then buy it at $50... I am sure a version of those words have been uttered a few times already around the negotiation table.

Ha ha ha ha ha . Shitrix is dead and all the leftovers are going to be homeless real soon.
Ha ha ha ha told you so

And to all those who kept saying “it’s a done deal, it won’t fall thru”

Enjoy your severance package

If you look at that article:

"In recent conversations with investors, banks have indicated the combined company would have generated $2.1 billion of earnings before interest, taxes, depreciation, and amortization, after taking into account expected cost savings from the deal, according to one of the people. That compares with Ebitda of around $1.1 billion for Citrix and $500 million for Tibco before the merger adjustments, the same person said."

Generating an additional $500 million in profits after taxes is hard. A massive gutting of US employees will start right away as the deal closes. The knives are out. Thats why they got the butcher here as CEO.

Mmm, I think you are missing the point. The loans are committed. Said another way, there is no way the banks can back out now absent a material adverse event, which is unlikely at this stage. Accordingly, the deal will close at $104. The issue that Bloomberg is describing is that the banks cannot offload the loans to investors as the climate is not good and the loans are seen as risky investments. Banks make money off fees tied to the bank financing (i.e. underwriting fees) and they also make money by selling those loans in secondary markets. Banks typically sell these loans in secondary markets to minimize exposure and potential credit risk if the debtor were to default on the payments. What the banks are saying is that there is no investor appetite for those loans as investments in secondary markets. Therefore, the banks are stuck with the loans on their balance sheets. This is risky considering how pressed for cash Tibtrix will be given the high cost of the loans. This therefore could prompt some loan loss write offs on the banks’ balance sheet for the risk of credit loss they would be assuming, which the banks don’t want to do. As a result, they want to offload them to secondary investors. However, to do this, they will have to discount the loans heavily similar to how a retailer discounts its inventory to entice a sale as investors don’t want to get stuck with risky loans without compensation in the form of a discount. Yet, this impacts the banks’ underwriting the loans, but not the loans themselves. Therefore, the acquisition will close once the final regulatory approvals are obtained.

As expected, the PE returns at $104 are looking dismal and the fact that they are financing most of the transaction with debt instead of their funds from their LPs says it all.

The bankers smell the rot and are not willing to peddle loans that will deliver a haircut on the principal, let alone unpaid coupon/interest payments.

If this continues, look for a renegotiated transaction at no more than $70, and even possibly $50. Then CTXS will be worth the investment and potential returns, especially as Tibrix is then reconstituted with splits of Wrike, DaaS, Network etc.

And don't let the regulatory approvals fool you. Those do not determine price- they only indicate govt approvals for competitiveness. No debt, no deal.