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Image source: LogMeIn.

What: Shares of LogMeIn, Inc. (NASDAQ:LOGM) jumped today on a strong earnings report and news that the company would merge with Citrix's GoTo videoconferencing unit. As of 11:22 a.m. EDT, the stock was up 20.5%.

So what: For the quarter past, the software-as-a-service provider posted per-share earnings of $0.49, better than estimates at $0.45, while revenue of $83.3 million topped the consensus at $81.8 million. More important was the deal with Citrix as the stock rose much higher once that news came out. In an all-stock deal valued at $1.8 billion, LogMeIn will merge with the unit that includes GoTo meeting and other similar products to create a company focused on technology applications for the workplace. Citrix (NASDAQ:CTXS) fell 2.5% on the news.

Now what: The deal is expected to close in the first quarter of next year and will be formed in a Reverse Morris Trust as Citrix shareholders will be issued LogMeIn shares. The combined company will have annual revenue of more than $1 billion and more than 2 million customers around the world. LogMeIn CEO Bill Wagner, who will become CEO of the new company, said the new entity will bring "profound benefits to out customers, our people, and our shareholders," and that the two companies' assets complement each other. Savings from cost synergies are expected to be more than $100 million within two years of the closing. With a market cap six times that of LogMeIn, the effect on Citrix will be minor but LogMeIn's surge seems deserved as the deal will help create a leader in office SaaS technology. 

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.