One of the most venerable names in the web conferencing market is set to undergo a major transition, with Citrix's announcement it will spin off GoToMeeting and other products in its GoTo family into a new company. Here are the key details on the pending transaction, which is scheduled to be completed in the second half of 2016:
Citrix believes that this strategic decision will allow Citrix and the company established by the spinoff to enhance their strategic focus and respective competitive positions, while permitting Citrix to improve operational efficiency. Immediately following the separation, Citrix shareholders will own shares in two publicly traded companies:
The company established as a result of the spinoff will be made up of GoToAssist, GoToMeeting, GoToMyPC, GoToTraining, GoToWebinar, Grasshopper and OpenVoice. This company will more effectively allocate resources in line with its own market opportunity, unique growth priorities and go-to-market capabilities, as well as adapt more quickly to SaaS market and customer dynamics; and, Citrix, which will focus on its strategic solutions for secure and reliable delivery of applications and data.
“Upon review, it is clear to us that the GoTo family of products is best suited to grow and operate as a standalone business,” said Bob Calderoni, interim CEO and president and executive chairman of Citrix. “This separation will create a leading, pure-play SaaS company that will have a targeted focus with the flexibility to invest in its portfolio of products."
The Bottom Line
While Citrix didn't say so specifically in its announcement, the planned spinoff comes following pressure from activist investor Elliott Management to divest the unit, which generated about $600 million for the year ended Sept. 30.
Analysts have pegged its total enterprise value at $3.4 billion, a price that seems within striking distance for an acquisition by a competitor looking to flesh out its collaboration portfolio. With at least seven months remaining until the planned separation, a lot could happen between then and now.
While the GoTo product family is profitable, it's also facing pressure from newer competitors. "Customers have several options today when it comes to web conferencing," says Constellation Research VP and principal analyst Alan Lepofsky. "There are the old standards like WebEx and GoToMeeting, but there are also many new more nimble choices, such as Fuze, Join.Me, BlueJeans, and Google Hangouts. I think GoToMeeting is struggling against the onslaught of new competitors."
For customers using Citrix’s collaboration tools the future holds several questions, Lepofsky notes. "While the GoTo family may now be able to focus more on their core meeting/conferencing features, the spin-off is taking away other key components." For one thing, ShareFile is staying at Citrix, and with respect to Podio, the company’s official statement is that it will reduce investment in it as a standalone product, and use the technology in other existing products, he adds. Podio will not be offered as a standalone product going forward.
As for potential acquirers, there are some likely as well as unlikely choices. "IBM, Microsoft and Google already have their own web-conferencing, so that leaves Salesforce, Infor, SAP and Oracle which could then integrate it into their products," Lepofsky says. "Salesforce has previously acquired DimDim and GoInstant, but not really delivered web conferencing inside Chatter and Communities yet."