recommending to the Citrix Board that the Citrix Board: (1) declare that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were advisable and in the best interests of the Company’s stockholders; (2) approve the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement; and (3) recommend adoption of the Merger Agreement to the stockholders of the Company. Thereafter, based upon the unanimous recommendation of the Transaction Committee, the members of the Citrix Board, other than Ms. Kilcoyne and Mr. Hogan who had recused themselves as discussed above, unanimously adopted resolutions: (1) declaring that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were advisable and in the best interests of the Company’s stockholders; (2) approving the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement; and (3) recommending adoption of the Merger Agreement to the stockholders of the Company.
Prior to the opening of the U.S. stock markets on the morning of January 31, 2022, the parties executed the Merger Agreement, Vista and Elliott delivered the executed Financing Commitment Letters and Guarantees, Elliott delivered the executed Voting Agreement, and the parties issued a joint press release announcing the Merger.
On February 8, 2022, representatives of Citrix contacted representatives of Vista and Elliott to discuss the proposed $20.0 million retention bonus program for unspecified Citrix employees. Representatives of Vista and Elliott indicated that they would be supportive of a retention bonus program, but did not formalize the amount of any such bonus pool or how it would be allocated. The parties agreed that they would formalize such bonus program at a later date, which has not occurred as of the date of this proxy statement.
Reasons for the Merger; Recommendation of the Citrix Board
The Citrix Board carefully reviewed and considered the proposed Merger in consultation with Citrix’s senior management and legal and financial advisors and, upon the unanimous recommendation of the Transaction Committee, the Citrix Board: (1) declared that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were advisable and in the best interests of the Company’s stockholders; (2) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement; and (3) recommended adoption of the Merger Agreement to the stockholders of the Company. Accordingly, the Citrix Board recommends that stockholders vote “FOR” adoption of the Merger Agreement at the Special Meeting.
In reaching their decision to approve the Merger Agreement, and to recommend that Citrix stockholders adopt the Merger Agreement, the Citrix Board and the Transaction Committee considered the following positive reasons to support the Merger Agreement:
| • | the fact that the price of $104.00 per share in cash payable in the Merger provides certainty, immediate value and liquidity to Citrix stockholders; |
| • | the historical market prices, volatility and trading information with respect to shares of Citrix common stock, including the fact that the $104.00 per share to be received by Citrix stockholders in the Merger represents a premium of approximately 30% to the unaffected five-day volume-weighted average price of Citrix common stock as of December 7, 2021, the last trading day before market speculation regarding a potential transaction, and a premium of approximately 24% over the closing price of Citrix common stock on December 20, 2021, the last trading day prior to media reports regarding a potential joint bid from Vista and Elliott; |
| • | the current and prospective business environment in which Citrix operates, including international, national and local economic conditions, the competitive environment (including competition from hyperscale providers of cloud platforms), and the likely effect of these factors on Citrix and the execution of Citrix’s plans as a standalone company; |
| • | the belief that the $104.00 per share in cash payable in the Merger was more favorable to Citrix stockholders on a risk-adjusted basis than the potential value that might result from other alternatives |
| reasonably available to Citrix, based upon the directors’ extensive knowledge of Citrix’s business, assets, financial condition and results of operations, the execution challenges that Citrix is facing, the risks associated with Citrix’s business model transition, Citrix’s historical and projected financial performance, and market dynamics, and the belief that the Merger represented an attractive and comparatively certain value for Citrix stockholders relative to the risk-adjusted prospects for Citrix on a standalone basis; |
| • | the process conducted by Citrix, with the assistance of its advisors, to review other potential strategic alternatives and, in connection therewith, the engagement with numerous counterparties, including both strategic parties and financial sponsors, regarding their interest in a potential acquisition of Citrix and the limited outreach from other third parties following the multiple media reports and market speculation regarding a potential transaction involving Citrix; |
| • | the belief that, after negotiations with Vista and Elliott and their respective representatives (as described in more detail under the section titled “— Background of the Merger”), $104.00 per share was the highest price that Vista and Elliott were willing to pay as of the date of execution of the Merger Agreement and that the terms of the Merger Agreement include the most favorable terms to Citrix, in the aggregate, to which Vista and Elliott were willing to agree; |
| • | the oral opinion of Qatalyst Partners, which was subsequently confirmed by delivery of a written opinion dated January 31, 2022, to the effect that, as of January 31, 2022, and based on and subject to the various assumptions made, procedures followed, qualifications, limitations and other matters considered in connection with preparation of such opinion as set forth therein, the per share consideration of $104.00 in cash, without interest, to be received pursuant to, and in accordance with, the terms of the Merger Agreement by the holders of shares of Citrix common stock (other than Parent or any affiliate of Parent) was fair, from a financial point of view, to such holders, as more fully described under the section of this proxy statement titled “—Opinion of Qatalyst Partners”, which full text of the written opinion of Qatalyst Partners is attached as Annex C to this proxy statement and is incorporated by reference in this proxy statement in its entirety; |
| • | the fact that Citrix has sufficient operating flexibility to conduct its business in the ordinary course prior to the consummation of the Merger; |
| • | the high degree of certainty that the Merger would close in a timely manner in light of the conditions and other terms set forth in the Merger Agreement; |
| • | the conditions to closing contained in the Merger Agreement, which are limited in number and scope, and which, in the case of the condition related to the accuracy of Citrix’s representations and warranties, is generally subject to a Company Material Adverse Effect (as defined in the section of this proxy statement titled “The Merger Agreement—Representations and Warranties”) qualification; |
| • | the ability of the Citrix Board to furnish information to, and conduct negotiations with, third parties in certain circumstances, and to terminate the Merger Agreement to accept a superior proposal upon payment of a termination fee of $409 million (which the Citrix Board believed was reasonable under the circumstances); |
| • | the end date of October 31, 2022 (subject to extension under certain circumstances), which is expected to allow for sufficient time to complete the Merger; |
| • | the availability of statutory appraisal rights to Citrix stockholders who do not vote in favor of the adoption of the Merger Agreement and otherwise comply with all required procedures under the DGCL; |
| • | the absence of a financing condition in the Merger Agreement, the obligations of Parent and TIBCO under the Merger Agreement to consummate the financing, and the limited number and nature of the conditions in the Financing Commitment Letters; |
| • | Citrix’s ability, under circumstances specified in the Merger Agreement and the Equity Commitment Letter, to specifically enforce Parent’s obligation to cause the equity financing to be funded as contemplated by the Merger Agreement and the Equity Commitment Letter; |
| • | the requirement that, in the event of a failure of the Merger to be consummated under certain circumstances, Parent will pay Citrix a termination fee of $818 million, and the obligations of the parties under the Guarantees to fund such amount; |
| • | representations by Parent in the Merger Agreement that it will have adequate resources to pay the merger consideration and other amounts required to consummate the Merger, taking into account the proceeds from the Financing Commitment Letters and the projected cash balances of TIBCO and Citrix; |
| • | Citrix’s rights to specific performance under the terms of the Merger Agreement; and |
| • | the likelihood that the Merger would be consummated, in light of the experience, reputation and financial capabilities of Vista and Elliott and the debt and preferred equity financing sources. |
In the course of its deliberations, the Citrix Board and the Transaction Committee also considered, among other things, the following negative factors:
| • | the fact that Citrix stockholders will not participate in any future growth potential or benefit from any future increase in the value of Citrix as a private company, or benefit from any synergies that may result from the combination of Citrix and TIBCO following completion of the transactions contemplated by the Merger Agreement; |
| • | the possibility that the Merger will not be consummated and the potential negative effects on Citrix’s business, operations, financial results and stock price; |
| • | the potential negative effects of the public announcement of the Merger on Citrix’s sales, operating results, business model transition, and stock price, its ability to retain key management, sales, engineering and other personnel, and its relationships with customers, suppliers and partners; |
| • | the restrictions on the conduct of Citrix’s business prior to the completion of the Merger, requiring Citrix to conduct its business in the ordinary course and preventing Citrix from taking certain specified actions, subject to specific limitations, all of which may delay or prevent Citrix from undertaking business opportunities pending completion of the Merger; |
| • | the significant costs involved in connection with entering into the Merger Agreement and completing the Merger (many of which are payable whether or not the Merger is consummated) and the substantial time and effort of Citrix management required to complete the Merger, which may disrupt its business operations and have a negative effect on its financial results; |
| • | the conditions to the obligations of Parent to complete the Merger and the right of Parent to terminate the Merger Agreement under certain circumstances; |
| • | the fact that the Merger Agreement precludes Citrix from actively soliciting alternative acquisition proposals, and the possibility that Citrix may be obligated to pay Parent a termination fee of $409 million in the event that Citrix terminates the Merger Agreement under certain circumstances; |
| • | if Parent fails to complete the Merger as a result of the failure to obtain the financing under the Debt Commitment Letter or the Preferred Equity Commitment Letter or a breach of the Merger Agreement in certain circumstances, remedies are generally limited to the Parent termination fee payable by Parent as described above, which may be inadequate to compensate Citrix for the damage caused, and if available, other rights and remedies may be expensive and difficult to enforce, and the success of any such action may be uncertain; |
| • | the fact that Parent requires significant third-party debt financing for the Merger and in the event that the lenders or preferred equity financing sources do not provide the financing under the Debt |
