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CITRIX SYSTEMS, INC.

(CTXS)
  Report
Delayed Nasdaq  -  04:00 2022-09-27 pm EDT
103.80 USD    0.00%
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Thoma Bravo's renegotiated deal has U.S. investors wondering who's next

06/07/2022 | 11:43am EDT
FILE PHOTO: A banner for Sailpoint Technologies Holdings Inc. is displayed on the front of the NYSE in New York

(Reuters) - Investors who speculate on whether mergers and acquisitions will be completed as agreed are betting against the shares of some companies that have inked leveraged buyouts in the wake of private equity firm Thoma Bravo renegotiating a deal.

The buyout firm convinced software firm Anaplan Inc to agree to a reduction to the $10.7 billion purchase price by about $300 million, the companies said on Monday.

Thoma Bravo argued that Anaplan breached a condition for their deal to be completed, and while the latter disagreed, it negotiated a 3.4% cut to the deal price to avoid lengthy litigation over the dispute, the companies said.

The renegotiation of that deal has coincided with the Nasdaq Composite Index dropping more than 24% since the start of the year, amid concerns about soaring inflation and a looming economic slowdown. This has fueled speculation among investors that some private equity firms may be getting buyer's remorse and are also looking to renegotiate their deals lower.

"This opens up a little bit of a Pandora's box because we don't know if it's just kind of a one-off thing, or is it the beginning of buyers that signed deals at the beginning of the year all of a sudden looking for recuts," said Chris Pultz, portfolio manager of merger arbitrage at Kellner Capital.

Shares of SailPoint Technologies Holdings Inc dropped 3% on Monday on investor fears that Thoma Bravo will seek to renegotiate its $6.9 billion deal to buy the identity security company.

Sources close to Thoma Bravo said Anaplan'a price cut was case-specific and the buyout firm had no current plans to push for a renegotiation of the SailPoint deal or other agreed transactions.

SailPoint did not immediately respond to requests for comment. Thoma Bravo declined to comment.

Shares of software company Citrix Systems Inc fell 2% on Monday on concerns that its $16.5 billion sale to Vista Equity Partners and Elliott Investment Management LP will be renegotiated.

Shares of auto parts maker Tenneco Inc dropped 4% on Monday on doubts over the company's $7.1 billion sale to Apollo Global Management Inc.

Citrix and Tenneco did not immediately respond to requests for comment.

To be sure, investors are still assigning odds higher than 50% that these leveraged buyouts will be completed, based on how the shares of the target companies are trading. But investors say the new uncertainty surrounding these deals underscores how the stock market volatility is pushing them to reassess whether they have priced in the worst-case scenario. "You could argue that the probability of these deals closing hasn't really changed. But the standalone downside has changed. And that has contributed to spreads widening," portfolio manager Roy Behren, co-president at Westchester Capital Management, said.

(Reporting by Krystal Hu in New York; Additional reporting by Chibuike Oguh in New York; Editing by Matthew Lewis)

By Krystal Hu


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
APOLLO GLOBAL MANAGEMENT, INC. -3.71% 49.6 End-of-day quote.-31.52%
CITRIX SYSTEMS, INC. 0.00% 103.8 Delayed Quote.9.74%
NASDAQ COMPOSITE 0.25% 10829.5 Real-time Quote.-30.95%
TENNECO INC. -1.10% 18.03 Delayed Quote.59.56%
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Analyst Recommendations on CITRIX SYSTEMS, INC.
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Financials (USD)
Sales 2022 3 321 M - -
Net income 2022 355 M - -
Net Debt 2022 2 542 M - -
P/E ratio 2022 37,3x
Yield 2022 1,07%
Capitalization 13 171 M 13 171 M -
EV / Sales 2022 4,73x
EV / Sales 2023 4,55x
Nbr of Employees 9 000
Free-Float 38,4%
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Technical analysis trends CITRIX SYSTEMS, INC.
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Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 5
Last Close Price 103,80 $
Average target price 104,00 $
Spread / Average Target 0,19%
EPS Revisions
Managers and Directors
Robert M. Calderoni Chairman
Woong Joseph Kim Executive VP, Chief Technology & Product Officer
Mark Schmitz Chief Operating Officer & Executive Vice President
Murray J. Demo Independent Director
Nanci E. Caldwell Lead Independent Director
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