Citrix to Buy NetScaler for $300 Million
biz.yahoo.com
Thursday June 2, 12:50 pm ET
By Joe Bel Bruno and Jennifer Malloy, AP Business Writers
Citrix to Buy NetScaler for $300 Million in Cash and Stock, Assume $23 Million Options
FORT LAUDERDALE, Fla. (AP) -- Citrix Systems Inc. on Thursday agreed to acquire Silicon Valley start-up NetScaler Inc. for just over $300 million, a high-profile deal that is part of the software maker's mission to redefine its business offerings.
The acquisition of San Jose, Calif.-based NetScaler brings Citrix products that help customers supercharge the pace at which Internet services are delivered. NetScaler customers -- including everyone from Major League Baseball to Internet search giant Google -- use the technology to boost the speed and security of their Web sites.
This marks one of the most aggressive acquisitions Citrix has completed in recent years, and the latest since it snapped up Silicon Valley networker Net6 in December. Citrix will spend $302 million in cash and stock to buy NetScaler, and assume $23 million in unvested stock options.
"This isn't a reinvention, but we are redefining our business through aggressive expansion that leverages the competencies that are already in place," said Citrix Chief Executive Mark Templeton. "We're building some new technologies, but also looking at buying early-stage technologies. We don't have a growth by acquisition strategy, this is handcrafted by the customer needs."
Moving into the so-called "application delivery management business" has also recently attracted the attention of rivals such as Juniper Networks Inc. and Cisco Systems Inc. Templeton believes the acquisition will offer existing customers products that complement its core businesses, which focus on allowing computers and wireless devices to remotely access applications from servers.
NetScaler estimates that up to 75 percent of all Internet users currently go through its systems each day. The company's technology works as sort of a traffic cop, moving data more efficiently by compressing some information and then "caching" it onto users' computers -- making some Web sites up to five times faster. NetScaler also offers more security for financial transactions conducted through the Internet.
"If you're a customer, and one of your employees is accessing the network at home or on the road, the NetScaler system just makes all of the applications run faster," said NetScaler Chief Executive B.V. Jagadeesh. "Similarly, if you're an Internet user and you're shopping on Amazon.com, you can buy more books in a shorter amount of time."
NetScaler was founded in 1998 and has about 200 employees with research and development teams in the Silicon Valley and India. Some of its most well-known customers include Google, Amazon, Dow Jones, Earthlink, E-Trade, MSN and Ticketmaster.
Venture capital firms' Sequoia Capital and Gabriel Venture Partners, as well as Goldman Sachs Inc., are among its backers. NetScaler will continue to operate in San Jose as the Application Networking Group, and will be led by Jagadeesh, reporting to Templeton.
The deal has already been approved by the boards of both companies and is slated to close in the third quarter. Citrix said it expects to post a third-quarter research and development charge of $5 million to $6 million, or 2 cents to 3 cents per share, related to the acquisition.
For the three months ending Sept. 30, the transaction is expected to add $5 million to $6 million in revenue and dilute earnings per share by 6 cents to 7 cents per share.
For 2006, the transaction is projected to add between $58 million and $60 million to Citrix revenue, and dilute bottom-line results. The deal is expected to be neutral to operating earnings by 2006. |
