Citrix Systems acquires server virtualisation firm XenSource

Citrix Systems Inc., the global leader in application delivery infrastructure, has announced a $500 million friendly takeover bid for XenSource Inc., a privately held leader in enterprise-grade virtual infrastructure solutions.

The cash and stock deal includes the assumption of approximately $107 million in unvested stock options.

Analysts speculate that the deal may invite giant Microsoft Corp to put in a rival bid exceeding Citrix's $500 million bid.

The deal was announced on the heels of the public listing of rival virtualisation software leader VMware Inc.'s $1.1 billion maiden issue, valued at $19 billion in which Cisco Systems and Intel Corp had earlier in July acquired a stake. (See: After Intel, Cisco to invest $150 million stake in VMware and Intel acquires 2.5 per cent stake in software firm VMware)

What may draw giant Microsoft is the fact that Microsoft has similar virtualisation software, called Viridian, which will be integrated with its Windows Server product due to be released in the third quarter of 2008.

Even though Microsoft plans to release the product in May next year, it had said that key functions of the virtualisation software would not be included in the first version and has not yet said when they will be.