Citrix in Deal to Merge GoTo Business With LogMeIn -- 2nd Update

By Liz Hoffman and Dana Cimilluca 

Citrix Systems Inc. struck a deal to merge its virtual-meeting division with LogMeIn Inc., a transaction that would beef up a business Citrix was already planning to spin off.

The deal is to be structured as a so-called Reverse Morris Trust, a tax-free transaction that has been popular of late as companies look to slim down and become more focused.

The deal values LogMeIn at $1.8 billion, a slight premium to the company's market value at the close of trading on Tuesday. Fort Lauderdale, Fla.-based Citrix had already said it would spin off the business, known as GoTo, in a tax-free deal in the second half of the year.

GoTo's software allows users to connect to business meetings from various devices, among other functions. It had revenue of about $600 million in the 12 months ended September. Boston-based LogMeIn also makes software that allows users to collaborate remotely. Its annual revenue, which comes mostly from subscriptions, has roughly doubled since 2012 and came in at $272 million last year.

Last fall, Citrix announced plans to spin off the GoTo business and to cut about 1,000 jobs. The moves came after activist investor Elliott Management Corp. called for changes at the software firm.

Elliott had urged Citrix, which has a market value of about $14 billion, to slim down by selling assets and cutting costs. It also suggested Citrix could sell or spin off some of its businesses, among other options.

Last summer, Citrix gave Elliot executive Jesse Cohn a board seat and placed him on a newly formed committee to focus on improving Citrix's profitability.

Reverse Morris Trust deals are tricky to accomplish but financially attractive as they combine merits of spinoffs and mergers.

Hewlett Packard Enterprise Co. last month struck a Reverse Morris Trust deal to spin out its technology-services operations and merge them with Computer Sciences Corp. Lockheed Martin Corp. is using one to shed its information-systems unit, combining it with Leidos Holdings Inc., whose investors will own 49.5% of the combined company.

Write to Liz Hoffman at [e-mail] and Dana Cimilluca at [e-mail]

(END) Dow Jones Newswires

July 26, 2016 16:49 ET (20:49 GMT)

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