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Elliott Management Pushes Citrix Systems for Change
Elliott Management, the activist investor that has made a lucrative practice out of shaking up technology companies, has found a new target.
Elliott, the $25 billion hedge fund founded by Paul Singer, sent a public letter to Citrix Systems on Thursday, urging the software company to cut costs and sell or spin off a number of its smaller operations to improve its stock price.
The moves could bolster the company’s stock price to $90 to $100 a share or more, Elliott argued in the letter. Citrix’s stock was up more than 7 percent in morning trading, at $70.87. It has been mostly flat over the last year, rising about 2 percent in the 12 months that ended on Wednesday.
In taking aim at Citrix, in which it holds a roughly 7.1 percent stake, Elliott is hoping to wring profits by prompting changes at another technology provider. The hedge fund has pushed for change at a collection of companies, including EMC, Riverbed Technology and Novell.
Now in the activist investor’s cross hairs is Citrix, whose products include virtualization software that lets users run software remotely, as well as conduct virtual meetings.
The letter outlines steps that the hedge fund says Citrix should take to improve its operations. They include cutting hundreds of millions of dollars in costs, spinning off or selling the company’s popular GoTo suite of products and selling its NetScaler enterprise software unit.
“Today, Citrix’s operations and product portfolio represent an opportunity for improvement of uniquely significant magnitude,” Jesse Cohn, the hedge fund’s head of equity activism in the Americas, wrote in the letter.
The hedge fund also said that the company needed to improve the stability of its management team, after a number of senior departures over the last two years.
To bolster its campaign, Elliott said that it had hired several advisers, including a team of veteran software executives, a consulting firm and two investment banks.
For now, the hedge fund said, it wants to hold discussions on a friendly basis and is asking for a meeting with Citrix’s management and board. But the activist investor also hinted that it would be willing to be more aggressive, such as angling for seats on the company board, if necessary.
“Elliott is prepared to push for change directly, but the far better course is for Citrix to embrace this offer of cooperation and for us to proceed collaboratively, and quickly, together,” Mr. Cohn wrote in the letter.
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