Citrix to buy virtualization company XenSource for $500 million

One day after the spectacular public offering of virtualization company VMware, Citrix Systems on Wednesday said that it intends to acquire open-source virtualization company XenSource for about $500 million.

Citrix makes so-called thin client software that delivers business applications from servers to desktop computers. By acquiring XenSource, the company intends to move into the adjacent server and desktop virtualization market. The acquisition will be financed through a combination of stock and cash and includes the assumption of $107 million in a vested stock options.
The company’s open-source “hypervisor” software, called Xen, lets a single computer run multiple operating systems simultaneously, which is a useful way to replace servers with one, more efficiently used computer. Xen is included in the two most used Linux server distributions from Red Hat and Novell and also works on Microsoft Windows. XenSource’s commercial offering, XenEnterprise, is based on the Xen software.

Gartner analyst Tom Bittman said that the price tag was high for XenSource and the acquiring company is a surprise. “We wouldn’t have expected Citrix to make the acquisition. We would have expected IBM, HP, Oracle, maybe Novell or Symantec,” he said.
Original Article by Martin LaMonica