What happened
Shares of enterprise software outfit Citrix Systems (CTXS) are up 13.4% as of 1:48 p.m. ET Tuesday, following reports that the company might be taken private.
So what
Bloomberg broke the story late Monday, suggesting private equity firms Elliott Investment Management and Vista Equity Partners are considering a joint acquisition of Citrix Systems.
Several ties already exist between the organizations in question. Elliott took on an initial stake in Citrix in 2015 in hopes that it would be able to drive cost cuts and, potentially, shed divisions that were habitual underperformers. And, though no longer in the role, Elliott partner Jesse Cohn was a member of Citrix's board of directors until last year. As for Vista's interest in a joint acquisition, it would reportedly use one of its existing software holdings called Tibco to consummate its part of the deal, pairing the two outfits to drive additional synergies.
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Citrix has also reportedly been looking for a buyer since September, a possibility made more likely by CEO David Henshall's resignation in October. A new permanent chief executive has not been named, and a potential buyer might prefer to pick its own top executive for the role.
Now what
Whether the deal gets done or not, acquisition speculation is a lousy basis for picking stocks. The potential bid price remains completely unknown, and there's not enough assurance that Elliott and Vista will make an official offer anyway.
That's not to suggest Citrix Systems shares are completely not worth owning here. But if you do own them, that ownership should be based on nothing other than Citrix's prospects for an actual turnaround while remaining a publicly traded company. If you're unsure of that, today's surge is little more than a chance to make an exit at a good price.
