The stock is down to $97. Thoma Bravo just renegotiated one of their deals. No doubt Elliott and Vista are combing through their agreements to find an excuse to renegotiate the deal price, given the market rout. If they succeed, then those who are staying for any promised RSU-equivalent long-term retention plans will be disappointed.
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Who would have thought all the experts on this page were wrong.
https://seekingalpha.com/news/3849595-citrix-systems-jumps-after-elliottvista-sale-filed-with-european-commission
Will they start refreshing employee rsus again when the deal is cancelled?
"When I put my money in PE fund" LOL I am sure you do dude, I am sure you do....
If you don't know, you don't know...
“Bought a bunch of shares for 90 bucks a piece to sell for 104 next month. I’ll be laughing all the way to the bank.”
Think about it like this. For the price to drop from $102 where it has been all along, even with the market turmoils, it means information is leaking out slowly that the deal is not a guarantee.
Look at the put options and you will see a huge premium from a few months ago. Someone more connected than you will be laughing with your money to their bank
Of course they are going to back out of it.
"When I put my money in PE fund" LOL I am sure you do dude, I am sure you do.
Stock remains down at $92 today. Not a good sign for an agreement that seemed impregnable.
Tech is down at least 30%- look at MSFT and many others. The lock on CTXS's price kept it from following its peers and brothers. For Elliott / Vista, regaining $5B in value means at least 2-4 more years of holding the company intact. Since the grand plan was to redo Arlen's folly and split up quickly into Wrike-DaaS and mini-me-networking, they will not be able to realize gains in a longer time frame- does not compute!
When I put my money in PE funds, I expect them to manage it wisely and deliver the strong returns on my hard earned money. I expect E/V to do the same and renegotiate this deal.
Bought a bunch of shares for 90 bucks a piece to sell for 104 next month. I’ll be laughing all the way to the bank.
The arbitrage is too high right now at almost a 15% discount to the $105 price
Elliott and Vista are combing through every loop ho-e to renegotiate or get out of this deal. You know Bobby C will sell everyone out including the rest of the ELT if he can help out Elliott and Vista with a little extra kicker in his direction.
Given the tech wipeout since January, they got caught holding the bag.
$104 was a steal back in Jan and still a decent deal in current market conditions.
Citrix is the best.
A very thought out and insightful post. Kudos.
I do not think however that there will be a renegotiation on the $104 price. Perhaps on some other aspects but opening up the share price would mean putting it in front of share holders again. I think that would push the acquisition out farther then the PE firms would like.
90 bucks now. The market knows something.
The deal is unlikely to fall through at the end. Citrix is a medium term cash cow that has three good parts that when split, will be worth more than the sum. Wrike is worth a good amount itself and will be the first to generate value- Vista knows this, they sold the asset to Citrix in the first place!
The DaaS/VDI part is a definite cash cow. Lots of customers who are stuck with Citrix for a long-time. While Microsoft has become far more aggressive, the number of integrations, scripts and jobs that have been built around Citrix is a strong moat, for a while. PE leaders can milk a lot of cash and with the right leadership (not the current ELT!) they can go into growth areas.
The networking part, or whatever is left of it, is the weakest. Leadership is all but gone, both from a product and people perspective. There is a base of customers here as well, but the substitution risk is greater and faster. Basically what is left is legacy apps that will never move to cloud, or extremely high-performance apps, which are being chipped away more slowly to cloud-native versions. PE will do well to get rid of this part to a low-opex aggregator in networking, the equivalent of Broadcom. There are not as many of those left so may be a bolt on to a player like an Imperva.
So call that 2.5 good assets, now at likely a 30-40% discount. And PEs still have a lot of cash to deploy, must deploy, to show that they are deserving of investments vs other lower-risk returns in a high interest macro environment.. So PE's will continue, but will want to renegotiate the deal.
Prediction is that the deal renegotiation should be done very soon as the deal close is imminent.
Hope it falls through.
A few more sobering facts. VMWare is being acquired by Broadcom for $61B with earnings of $1.8B last year. Citrix earnings last year= $300M. Even if we assume VMWare and Citrix are similar, which they are not, a comparable earning multiple would put Citrix at a $10B valuation for a transaction, including its premium. Hence the likelihood of some renegotiation on the transaction
The stock would be in the $50's with the market rout.. Even Microsoft is down 30% from the same time period! The $104 price was a 25% premium to $80.. Add the same premium today and you get a $60-70 transaction price. That's the cold hard logic of the market.
Ask Tony the gnome or Bobby knuckles and I bet they’ll tell you the deal is at risk. It’s bc they are involved. They will sc--w it up like everything else they touched
DH
I cannot understand the hatred people seem to have to Citrix and the people still there. This post is such total bullsh!t. When the deal for $104 was being negotiated back in the December timeframe the stock was in the $80s. I mean really learn to use Google before posting such stupid cr@p
Stock down to $95 today. Investor confidence is shaken about Elliott boys looking for a renegotiation or cancel? If Elliott/Vista terminate, their cost of termination is $818M- not a small sum but certainly smaller than the $5B+ in excess value they are paying to Citrix now. At this rate, they will likely re-negotiate the value down to ~$70 in per share before this deal closes and still acquire.
Still hanging in there?