Citrix to buy privately held XenSource for $500 mln

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Aug 15 (Reuters) - Citrix Systems Inc. (CTXS.O: Quote, Profile, Research, Stock Buzz) said it agreed to buy privately held XenSource Inc. in a deal valued at about $500 million, including the assumption of stock options, to enter into the adjacent server and desktop virtualization markets.

The infrastructure software maker said the cash and stock deal, which is expected to close in the fourth quarter, will result in a non-cash charge of about $8 million to $10 million in the quarter it closes.

Citrix said the acquisition includes the assumption of about $107 million in unvested stock options.

XenSource provides system virtualization technology, which helps present the resources of a single computer as if it were a collection of separate computers.

The deal is expected to add about $1 million in revenue and $3 million in cost of revenue and operating expenses to fiscal year 2007, Citrix said.

For fiscal 2008, the acquisition is expected to add about $50 million in revenue and $60 million to $70 million in total cost of revenue and operating expenses.

Upon the completion of the deal, XenSource Chief Executive Peter Levine will head the new virtualization and management division of Citrix.