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August 20, 2007
Citrix Acquires XenSource
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Citrix Systems Inc., the global leader in application delivery infrastructure, announced a definitive agreement to acquire XenSource Inc. of Palo Alto, Calif., a privately held leader in enterprise-grade virtual infrastructure solutions, for approximately $500 million in a combination of cash and stock, which includes the assumption of approximately $107 million in unvested stock options. This acquisition moves Citrix into adjacent server and desktop virtualization markets, expected by Citrix to grow to nearly $5 billion over the next four years. The combination of Citrix and XenSource brings together significant customer, technical, channel and go-to-market synergies. This will allow Citrix to extend its leadership in the broader Application Delivery Infrastructure market by adding key enabling technologies that make the end-to-end computing environment far more flexible, dynamic and responsive to business change. The acquisition will also strengthen each company's strong partnership with Microsoft and commitment to the Windows platform.
The acquisition is expected to close in the fourth quarter of 2007 subject to the satisfaction of closing conditions.
Leveraging the Power of Xen
XenSource is the leading provider of enterprise-class virtual infrastructure solutions built on the open source Xen hypervisor. Originally created by the founders of XenSource at University of Cambridge, the Xen virtualization "engine" is now developed collaboratively by an active open source community of senior engineers at many of the industry's most innovative infrastructure companies, including leading hardware vendors like Intel, IBM, HP and AMD. This open collaborative approach significantly accelerates the innovation of the Xen engine, leading to continual state-of-the-art improvements in performance, scalability and cross-platform support. The next-generation Xen architecture is widely acknowledged for its industry-leading performance, efficiency, security and native support for the latest hardware-assisted virtualization features from Intel, AMD and leading device vendors.
Today's acquisition announcement comes on the heels of a substantial new release of XenEnterprise, the company's flagship commercial product line powered by the Xen engine. XenEnterprise v4 marks a significant milestone in XenSource's transition from a next-generation technology company into a leading provider of comprehensive enterprise-class virtual infrastructure solutions. With powerful new management, availability and ease-of-use features, XenEnterprise v4 raises the bar as the most open, scalable, high performance virtualization platform on the market. In a recent head-to-head product comparison published this week in CRN, the industry's leading publication for channel resellers and integrators, reviewers praised XenEnterprise v4 as an "easy-to-use, feature rich offering that is quickly catching up to its main rival". Channel partner and customer enthusiasm over the XenEnterprise product line has lead to a rapid increase in customer demand. Version 4 will further accelerate an installed base that has more than doubled in the last 90 days to over 650 customers.
"The combination of Citrix and XenSource brings together both presentation and server virtualization to deliver more choice and flexibility to the market, particularly Citrix's strong installed base," said John Humphreys, program vice president of Enterprise Virtualization for IDC. "By adding mobility, monitoring and storage integration in the recently introduced XenEnterprise v4, XenSource has narrowed the capability gap and delivered a viable virtualization solution for server consolidation."
Upon close of the acquisition, the XenSource team and products will form the core of the new Virtualization & Management Division of Citrix dedicated to building and growing these important new businesses. Peter Levine, XenSource, CEO, will lead the new division, reporting directly to Mark Templeton, Citrix President and CEO. Under Peter's leadership, Citrix is also committed to maintaining and growing its support for the Xen open source community, led by XenSource co-founder and Xen project leader, Ian Pratt. Between now and the close of the acquisition, XenSource will work with the key contributors to the Xen project to develop procedures for independent oversight of the project, ensuring that it continues to operate with full transparency, fairness and vendor neutrality -- principles that are critical to the continued role of Xen as a freely available open source industry standard for virtualization.
"Today is a great day for the virtualization market because customers will now have a strong alternative that is open, proven and backed by one of the most successful end-to-end software infrastructure leaders in the entire industry," said Peter Levine, CEO of XenSource. "This move is not about competing for the five percent of the market that is already being served. It's about steering into the 90 percent white space that is wide open, both at the server and in new emerging opportunities at the desktop."
"This announcement represents a key milestone for the Xen project," said Ian Pratt, leader of the Xen project and co-founder of XenSource. "Citrix is committed to our community and the principles of transparency and neutrality that allow us to work together on the reference standard for virtualization, promoting the rapid, ubiquitous adoption of virtualization."
Strong Alignment with Microsoft
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Source: Citrix Systems Inc.
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