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Citrix Targeted by Activist Investor Elliot Management

Activist investor Elliott Management wants to meet with the top brass at Citrix, one of Microsoft's largest partners, to discuss options that would boost the value of Citrix's shares, the hedge fund manager said this week.

 In a letter to Citrix CEO Mark Templeton, Chairman Thomas Bogan and the company's board of directors Thursday, Elliott indicated it wants to see the company improve its operations and spin off its assets. Given Elliott's 7.1 percent stake in Citrix, and its history of targeting companies it believes are undervalued because of how they're structured, the move pushed Citrix shares up 7 percent yesterday and were up 2.6 percent midday Friday. Given Elliott's influence and holding in the company, Citrix can't ignore the request either.

In the letter, Elliott said it believes Citrix is significantly undervalued, suggesting its stock could be worth up to $100 per share by the end of next year. It was trading at $72 Friday but has jumped since Elliott released its letter Thursday.  Elliott released the letter following a 13D filing which requires disclosure when acquiring more than 5 percent of a publicly traded company's shares.

In its letter, Elliott believes that  the 50 percent jump in value "is achievable because Citrix has leading technology franchises in attractive markets but has struggled operationally for years. As a result, today Citrix's operations and product portfolio represent an opportunity for improvement of uniquely significant magnitude." In a statement, Citrix responded: "We will review Elliott's suggestions and respond as we do with all shareholders who engage with us. The Citrix Board and management team continually evaluate ideas to drive shareholder value and are committed to acting in the best interests of all our shareholders."

Citrix stock has grown only 2.8 percent over the past year before this week's jump in response to Elliott's move. In its April earnings release, Citrix lowered its outlook for the year amid a 48 percent drop in profit, resulting from this year's January restructuring. Citrix is betting big on its new Cloud Workspace platform, which aims to bring together key assets including ShareFile, XenDesktop, XenApp and Netscaler. Cloud Workspace, which Citrix emphasized at its annual Synergy conference last month in Orlando, can function as an organization's cloud control plane, bridging multiple public and private clouds, including core datacenter assets, to various client systems including a wide array of mobile devices.

According to various published reports, Elliott likely wants Citrix to shed or spin off some assets, reduce headcount or buy back shares.

Posted by Jeffrey Schwartz on 06/12/2015 at 12:08 PM


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