Citrix Systems, Inc. (NASDAQ: CTXS)
shares are down over 22 percent on Wednesday, as it announced
the completion of the spinoff of its GoTo family of service offerings and its subsequent merger with LogMeIn Inc
(NASDAQ: LOGM) in a merger of online meeting organizers.
The Deal
The transaction, according to the company's release, would leave Citrix shareholders with 0.1718 shares of LogMeIn common stock
for each share of Citrix they held as of January 20, 2017. The fractional shares will be compensated with cash.
The spinoff was announced in November 2015. At
that time, Citrix said the company formed out of the spinoff will be made up of GoToAssist, GoToMeeting, GoToMyPC, GoToTraining,
GoToWebinar, Grasshopper and OpenVoice.
Subsequently in July 2016, LogMeIn and Citrix Systems announced a merger agreement, providing for LogMeIn merging with Citrix'
GoTo business in a Reverse Morris transaction. The deal
was valued at $1.8 billion and would result in the merged entity owned equally by Citrix and LogMeIn shareholders. The combined
company was expected to be a leading SaaS company, with innovative product portfolio, with combined annual revenue of more than $1
billion and serving over 2 million customers.
Analysts' Take
Barclays said in a note in October
2016 that deal is a game changer, as it thinks there are enough ways for the company to win apart from traditional synergies.
Citing the higher overlap between both businesses, Barclays analyst Raimo Lenschow said he is confident of the company delivering
more than the guided range of cost synergies, once the merger is complete.
MKM Partners, meanwhile, believes the spinoff would pave way for share buybacks for Citrix, helping to boost earnings per share
by 4–8 percent, depending on the size/timing. The firm said in a note on January 9 that at current prices, there is a 4 percent
arbitrage between Citrix and LogMeIn, down from 10 percent since its November 30 note on the transaction.
At Time Of Writing
- Citrix shares were plunging 22.69 percent to $70.50.
- LogMeIn shares were down 3.12 percent at $104.80.
Image Credit: Coolcaesar at the English language Wikipedia [GFDL or CC-BY-SA-3.0], via Wikimedia Commons
Latest Ratings for CTXS
Date |
Firm |
Action |
From |
To |
Jan 2017 |
Wells Fargo |
Initiates Coverage On |
|
Market Perform |
Dec 2016 |
Mizuho |
Upgrades |
Neutral |
Buy |
Oct 2016 |
Cowen & Co. |
Maintains |
|
Outperform |
View More Analyst Ratings for
CTXS
View the Latest Analyst Ratings
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