Citrix & LogMeIn complete complicated, tax-free sort-of merger
- 28 July, 2016 07:18
LogMeIn, the makers of the popular remote desktop software as well as IT security and conferencing offerings, will become part of a Citrix subsidiary in the wake of a complicated, $1.8 billion transaction announced Tuesday by the two companies.
The transaction is what’s called a Reverse Morris Trust, which apparently allows the untaxed transfer of a subsidiary to new ownership by spinning off a new company and completing a merger. In this case, Citrix has created a wholly-owned subsidiary called GetGo, which owns its GoToMeeting products.
GetGo then merges with a wholly-owned subsidiary of LogMeIn to create a new company, in which Citrix shareholders own 50.1% of the stock and LogMeIn shareholders own 49.9%. The combined company will be led by current LogMeIn President and CEO Bill Wagner.
Citrix had announced its desire to spin off the GoTo family of products – which include GoToMeeting, GoToMyPC, and GoToAssist – in November of last year to focus on its virtualization business and the secure delivery of apps and data (see our April interview with Citrix's CEO titled "Introducing the new Citrix"). A report from Bloomberg notes that the Reverse Morris Trust transaction has become a popular way for technology companies to spin off divisions without incurring tax penalties, citing a similar deal earlier this year in which HPE merged its call-center business with Computer Science Corp.
So what does this mean for users of both LogMeIn and Citrix products? There could be consolidation of Citrix GoToMeeting and LogMeIn join.me conferencing products, which compete with offerings from the likes of Cisco and Microsoft.
But in the short term, says IDC analyst Rob Brothers, customers are unlikely to see a great deal of change. Down the road, however, the combination of the two companies could produce benefits in the area of internet of things, particularly where IT operational tech is concerned.
“IT devices are taken care of from a product perspective but not from a market saturation perspective,” Brothers says. “The [internet of things] area is fairly greenfield, and may provide for some interesting areas of opportunity for support coverage, some of which we have already seen.”
Vanessa Thompson, also of IDC, says that the deal is a good one for both parties, since both make substantial gains because of it. While Citrix gets the expertise of LogMeIn’s senior leadership, LogMeIn gets access to Citrix’s user base.
“The combined user base can expect the same or better experiences as part of the merged offering,” she says.