Citrix to buy XenSource for $500 million?

Brian Madden is reporting a rumor claiming Citrix is in talk for Citrix acquisition and deal amount may be as high as $500 million.

Almost at the same time Credit Suisse, which is a lead underwriter of upcoming VMware IPO, released a research analysis about why Citrix should buy an hypervisor and why XenSource is the best candidate at the moment:

We believe that Citrix may be interested in acquiring core virtualization infrastructure and management tools as part of a strategy to broaden its product portfolio to better address the next generation data center-based on our analysis of the desktop virtualization market as well as recent feedback from industry participants, combined with management’s recent public comments that virtualization and systems management are areas of potential interest for acquisition.

In our opinion, one of the Xen developers-either XenSource or Virtual Iron-could represent an attractive target for Citrix, as we believe that hypervisor and associated management solutions would be complementary to Citrix’s long-term vision of offering scalable application and desktop delivery. While these companies’ virtual infrastructure management tools are more immature versus more-established vendors, if Citrix can develop robust management software through increased R&D while leveraging the open source Xen hypervisor, Citrix could establish itself as a strong competitor in both desktop and server virtualization within two to three years. Acquiring XenSource could also strengthen Citrix’s relationship with Microsoft. Conversely, while timing and pricing for any potential transaction is unknown, the near-term implication of an acquisition of either vendor would likely be some EPS dilution…

Read the whole analysis at source.

(virtualization.info is mentioned among trusted sources for this research)

Thanks to DABCC for the news.