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Citrix Will Replace Chief, Bending to Elliott Management
The activist hedge fund Elliott Management has scored another victory in its battle with a technology company.
Citrix Systems said on Tuesday that it had agreed to make several changes, including replacing its longtime chief executive and giving Elliott a seat on the board.
The software company also said that it would explore a potential sale or spinoff of its GoTo line of products, which provide videoconferencing.
Together, the announcements constitute another instance in which Elliott — a $25 billion hedge fund that has found success in battling technology companies — has forced change at a target of its shareholder activism campaigns.
Elliott emerged as a major investor in Citrix last month, with a stake that amounted to about 7.5 percent of Citrix shares. It called on the company, which makes popular virtualization software, to cut hundreds of millions of dollars in costs and explore parting with some of its businesses.
In a letter last month, the activist investor insisted that it wanted to bring about the changes cordially without too much public fighting.
Among the biggest changes that Citrix announced was the impending retirement of Mark Templeton, the company’s chief executive of 14 years. Citrix has retained an executive search firm to find his replacement.
“Mark Templeton is a software industry giant,” Thomas Bogan, Citrix’s lead independent director, said in a statement. “Under his 20 years of leadership, Citrix has transformed to a $3b global technology leader.”
The company also agreed to give a board seat to Jesse Cohn, Elliott’s head of equity activism in the United States, replacing Asiff Hirji, an existing director. Citrix said it would look for a new independent board member who would be agreed upon by both sides.
“We believe the addition of new and fresh perspectives to our board will ensure Citrix continues to lead in application networking and virtualization markets,” Mr. Bogan said in a separate statement.
Mr. Cohn added, “We are confident that the initiatives announced today and the addition of new directors to the company’s board will allow Citrix to build upon its position as an innovative industry leader, and to drive significant shareholder value.”
Citrix also said its board would form an operations committee to re-examine the company’s business and finances.
Separately, Citrix said its net income for the quarter that ended June 30 nearly doubled from the same time last year, to $103.3 million. Revenues rose slightly, to $796.8 million.
Citrix was advised by the boutique independent investment bank Qatalyst Partners, run by Frank Quattrone; Goldman Sachs; and the law firm Goodwin Procter.
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