Citrix 2006 Annual Report Download - page 87

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
Citrix Systems, Inc.  Annual Report
if certain conditions in the agreement are satisfied prior
to the closing of the acquisition. In addition, in connection
with the acquisition, the Company will issue approximately
1.4 million unvested shares of the Company’s common
stock and it will assume approximately 3.4 million stock
options each of which will be exercisable for the right to
receive one share of the Company’s common stock upon
vesting. Transaction costs associated with the acquisition
are currently estimated at $3.7 million. In addition, the
Company estimates that it will expense approximately
$8.0 to $10.0 million in IPR&D upon the closing
of the transaction.
The Sevin Rosen funds, a venture capital firm, is a
stockholder in XenSource. Stephen Dow, a member of
the Company’s Board of Directors, is a general partner
of the Sevin Rosen funds and does not directly hold any
interest in XenSource. Although the Sevin Rosen funds
are represented on the Board of Directors of XenSource,
Mr. Dow is not a director of XenSource. The Company’s
acquisition of XenSource, if closed, will provide a return
to all partners of the Sevin Rosen funds, including
Mr. Dow. Subject to certain assumptions, the Company
currently estimates that the potential allocation to Mr. Dow
through the general partner entities of the Sevin Rosen
funds related to the Merger is approximately $1.9 million.
Mr. Dow has been on the Company’s Board of Directors
since 1989 and currently owns 262,349 shares of its
common stock. Mr. Dow did not attend the meeting at
which the Company’s Board approved the transaction and
recused himself from the vote to approve the transaction.
Consistent with the Company’s policies and the charter
of the Nominating and Corporate Governance Committee
of the Company’s Board of Directors, the acquisition of
XenSource was reviewed and approved by the Nominating
and Corporate Governance Committee. There are no
material relationships among the Company and XenSource
or any of their respective affiliates or any of the parties
to the agreement to acquire XenSource and related
agreements, other than in respect of such agreements
themselves and as disclosed herein.
Ardence Delaware, Inc.
On January 5, 2007, the Company acquired all of the
issued and outstanding capital stock of Ardence Delaware,
Inc. (“Ardence”), a leading provider of solutions that allow
information technology administrators to set up and
configure PCs, servers, and Web servers in real time from
a centrally managed source. This acquisition strengthens
the Company’s application delivery capabilities with more
robust streaming and provisioning technologies that
improve information technology agility, increase security
and reliability, and offer new options for how businesses
deliver applications and desktops to end-users. The
consideration paid to the stockholders of Ardence in this
transaction was cash of approximately $50.6 million. In
addition, the Company incurred approximately $2.0 million
in acquisition related costs and it assumed approximately
0.2 million unvested stock-based instruments, each of
which will be exercisable for the right to receive one share
of the Company’s common stock upon vesting.
XenSource, Inc., Acquisition
On August 14, 2007, the Company signed a definitive
agreement to acquire XenSource, Inc. (“XenSource”)
a privately held leader in enterprise-grade virtual
infrastructure solutions. The acquisition will move the
Company into adjacent server and desktop virtualization
markets that will allow it to extend its leadership in the
broader Application Delivery Infrastructure market by
adding key enabling technologies that make the end-
to-end computing environment more flexible, dynamic
and responsive to business change. The closing of the
acquisition is targeted for the fourth quarter of 2007
and is subject to XenSource stockholder and regulatory
approvals. The acquisition has received clearance under
the Hart-Scott-Rodino Antitrust Improvements Act of
1976. The Company plans to fund the acquisition through
the use of its available cash and stock. In accordance
with the terms of the agreement, the Company will issue
approximately 4.2 million shares of its common stock
to the stockholders of XenSource and they will receive
approximately $175.5 million in cash consideration. The
number of shares, however, could increase to 6.5 million
and the cash consideration could decrease to $92.5 million