Keysight Technologies (NYSE: KEYS), the global test equipment manufacturer headquartered in Santa Rosa, CA, announced its intention to acquire London-based Spirent Communications PLC (LSE: SPT) for a cash consideration of about $2.50 per share or nearly $1.5 billion, on a fully diluted basis. Spirent shareholders will also be entitled to receive a special dividend that will be incremental to the per share bid price, in lieu of any final dividend that Spirent would have offered for the year ended December 31, 2023.
Keysight sees Spirent’s business as highly attractive and aligned with Keysight’s long-term software-centric solutions strategy. Keysight believes there is strategic synergy between the two businesses, and that the parties’ respective complementary products will help customers address their complex engineering challenges. Keysight’s formal bid came just weeks after Chandler, AZ-based test equipment competitor, Viavi Solutions (NASDAQ: VIAV), offered roughly $2.25 a share.
Spirent’s board of directors intend to unanimously recommend Keysight’s offer which is conditional on the approval of the majority of Spirent shareholders and regulatory agencies.
Keysight and Spirent are both focused on enabling secular technology megatrends such as mobile data, AR/VR and AI across key end-markets, including wireline and wireless communications, aerospace and defense, and enterprise sectors. With Spirent’s offerings, Keysight hopes to expand its serviceable addressable market opportunities by $1.5 billion.
For its FY2023, ending October 31, Keysight reported global revenues of $5.5 billion, up one percent year-over-year. Of that total, its Commercial Communications segment came in at $2.4 billion or 46 percent of the total, down seven percent YoY, reflecting the slower demand in telecom markets.
By comparison, Spirent’s 2023 revenues for the year ending December 31, 2023 were $474 million, down 22 percent from $608 million in 2022. Spirent’s Network & Security segment, which accounted for 58 percent of the total, recorded revenue of $275 million, down 20 percent YoY.
Keysight says the acquisition meets its strategic and financial M&A criteria. Post integration, Keysight expects Spirent to be accretive to Keysight’s gross and operating margins.
“Spirent has a differentiated portfolio, which is a strong fit for Keysight. Both companies share a common focus on empowering and accelerating high-value solutions for customers,” comments Satish Dhanasekaran, Keysight President & CEO. “In Keysight, Spirent will join a platform of significant customer scale with the capacity to provide the necessary capital and resources to help Spirent grow and accelerate the delivery of its strategic vision. Keysight’s long-term customer relationships, industry expertise and global reach will help Spirent drive product development and execute on its full potential.”
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