Gaining speed, Citrix buys NetScaler

Citrix last week said it would acquire application acceleration hardware vendor NetScaler for about $300 million in cash and stock.

NetScaler makes application appliances that handle such tasks as load balancing, content caching and remote-access functionality. Its customers include Google, Amazon.com, Microsoft's MSN and Ticketmaster. NetScaler estimates that as many as 75% of Internet users pass through a NetScaler system each day.

The company also focuses on optimizing delivery of custom Web applications and ERP applications such as those from Siebel, SAP and Oracle. That market is where Citrix sees NetScaler's technology complementing its own flagship Presentation Server for managing and deploying enterprise applications, according to David Jones, Citrix's senior vice president of corporate development.

Citrix plans to let NetScaler continue operating fairly autonomously in San Jose, under the leadership of current NetScaler CEO B.V. Jagadeesh. NetScaler will be renamed the Citrix Application Networking Group, and Jagadeesh will report to Citrix CEO Mark Templeton. Citrix expects to retain most of NetScaler's 200 employees, Jones says.

Pending shareholder and regulatory approvals, Citrix expects the deal to close in the third quarter, after which it will immediately begin offering NetScaler's products through its own channel. NetScaler is privately held. Citrix valued the deal at $300 million and said it will pay 45% of the purchase price in cash and the rest in shares of its stock.

Citrix has used several acquisitions to expand its product line, including its $50 million purchase last year of SSL VPN vendor Net6 and its 2003 buyout of GoToMyPC maker Expertcity. Jones says Citrix has retooled its acquisition strategy following the "difficult" integration of its first major purchase, its 2001 takeover of portal software maker Sequoia Software. On its next major deal, Expertcity, Citrix decided to let the company continue running separately, a strategy that has paid off through a smoother transition.

Citrix competes with a variety of vendors, including Cisco, Microsoft, Sun, Aventail and Juniper.

Cowley is a correspondent with the IDG News Service.

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