In the first major test acquisition of the year, pure-play testing company Keysight Technologies will purchase network visibility and testing company Ixia for $1.6 billion.
The move will boost Keysight’s position in software-centric test offerings as well as expand its portfolio into new parts of the network development cycle, including network operations.
Reuters reported in December that Ixia was working with an investment bank to explore a sale, which the company did not confirm but that still caused a nearly 20% jump in the company’s stock price. Share prices rose almost seven percent on Monday in response to the acquisition announcement, to close at $19.45 per share.
Keysight said that Ixia shareholders will receive $19.65 per share in cash, a price that reflects a “premium of approximately 45 percent to Ixia’s unaffected closing stock price on Dec. 1, 2016, the last trading day prior to media reports that Ixia was considering strategic alternatives, and a premium of approximately 38 percent to the Ixia’s unaffected 52-week high closing stock price for the period ended Dec. 1, 2016.”
The governing boards of both companies have unanimously approved the deal, which is expected to close by the end of October, subject to regulatory approvals.
Back in 2015 after Keysight’s Anite acquisition closed, Nersesian said that the company had a “strong” appetite for acquisitions. Keysight at that point was in its first year of operation as a standalone company, after its spin-off from former parent company Agilent.
On a call with investors on Monday morning, Keysight CEO President and CEO Ron Nersesian called the deal a “100% complementary combination” that adds $2.5 billion in served addressable market, along with growing Keysight’s software-driven revenues and boosting Keysight’s number of software research and development engineers by 65%. “This acquisition … is in direct alignment with our growth initiatives, including expanding our portfolio of software-centric solutions,” Nersesian said.
He went on to say that the acquisition is expected to allow Keysight to grow faster, and noted that Ixia is a leader in network testing — where some segments are growing faster than the overall test market — and in network visibility, which is “experiencing high growth.”
Nersesian also referenced Keysight’s strategy to move its testing portfolio from the physical layer up the networking stack and across the development cycle from R&D to design to validation, through moves such as its acquisition of Anite and now continuing that expansion with the purchase of Ixia, which gives Keysight a position in network operations.
Nersesian added that he expects to see revenue synergies from the transaction in three areas: Keysight leveraging Ixia’s sales channels and vice versa; developing new, enhanced solutions; and improving scale to “drive upside in network visibility.
“This acquisition checks all the boxes with respect to the strategy we have outlined for Keysight and our well-defined criteria for acquisition,” Nersesian said.
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