Reverse Morris Trust Is GoTo Strategy For Citrix As It Merges Division With LogMeIn

Last November, Citrix Systems(CTXS) announced plans to spin off its GoTo business.  This week, it announced that the spinoff would culminate in a merger with LogMeIn(LOGM) in a Reverse Morris Trust transaction. The transaction, which is expected to be tax-free, will leave Citrix shareholders owning 50.1% of the new company. LogMeIn’s management team, led by CEO Bill Wagner, will continue to lead the combined company.

The company expects that after the realization of synergies, the combined company will have annual revenues in excess of $1 billion and free cash flow in excess of $250 million annually.  Citrix has created a subsidiary called GetGo which holds the GoTo assets. In the first quarter of 2017, Citrix shareholders will receive shares of GetGo, which will immediately merge with a subsidiary of LogMeIn, leaving Citrix shareholders with LogMeIn shares.

LogMeIn shareholders will receive $1.50 in special dividends, the first third of which will be paid on August 26 to shareholders of record as of August 8. Though GoTo and LogMeIn have similar product lines, LogMeIn CEO Bill Wagner stated that

“there’s plenty of room” for products like LogMeIn’s join.me and GoToMeeting “to continue down similar but distinct paths.”

LogMeIn stock rose nearly 20% in yesterday’s trading after the deal was announced.

Disclosure: The author holds no shares of any stock mentioned