Recommended Cash Offer by Keysight for Spirent Communications PLC
Keysight Technologies announces intention to acquire Spirent Communications PLC for approximately £1,158 million, with a cash consideration of 199 pence per share. Spirent's board intends to recommend the offer, highlighting new market opportunities and strategic synergy between the companies.
The proposed acquisition of Spirent Communications by Keysight Technologies is a significant event that has the potential to reshape the landscape of the technology sector, particularly in the fields of communications, aerospace and defense, automotive and enterprise sectors. The synergy between the two companies is expected to unlock new serviceable available market (SAM) opportunities, estimated to be up to US$1.5 billion. This figure is noteworthy as it represents a substantial expansion potential for Keysight's current market reach.
From a market research perspective, the integration of Spirent's portfolio with Keysight's offerings is anticipated to enhance the combined entity's competitive edge. The focus on software-centric solutions is aligned with industry trends towards increased digitalization and the integration of software in product offerings. The acquisition could enable Keysight to offer more comprehensive end-to-end solutions, which might increase customer retention and attract new clients seeking streamlined product ecosystems.
However, the long-term success of this acquisition will depend on the effective integration of Spirent's operations and the realization of the projected synergies. It is important to monitor post-acquisition performance to gauge whether the combined entity can achieve the expected operational and financial efficiencies.
From a financial standpoint, the acquisition of Spirent by Keysight for approximately £1,158 million, inclusive of a special dividend, can be considered a strategic investment aimed at enhancing Keysight's future earnings potential. Keysight's management has indicated that the acquisition is expected to be accretive to gross and operating margins, suggesting a positive impact on profitability metrics post-integration.
The offer of 199 pence per share, including a special dividend, represents a premium on Spirent's current trading price. This premium is a common practice in acquisitions to incentivize shareholders to approve the deal. The financial details provided suggest that Keysight has conducted a thorough valuation of Spirent, factoring in not only its current financial performance but also the potential for future growth and synergies.
Investors should consider the acquisition's impact on Keysight's balance sheet, including the potential increase in debt levels or dilution of equity. They should also assess the company's ability to generate sufficient cash flows to service any additional debt incurred. It is important to analyze the acquisition within the context of Keysight's overall M&A strategy and its track record of integrating acquired companies.
The acquisition is subject to approval by Spirent shareholders and regulatory bodies, which introduces a level of uncertainty. Shareholder approval hinges on the belief that the offer is in their best interest, considering the premium on the share price and the strategic rationale provided. The unanimous recommendation by Spirent's board is a strong signal, but the outcome will ultimately be decided by shareholder vote.
On the regulatory front, the acquisition will be scrutinized to ensure compliance with competition laws and regulations. Given the scale and potential market influence of the combined entity, regulatory authorities will assess the deal's impact on market competition. The review process can be lengthy and may impose conditions or restrictions to mitigate any anti-competitive concerns.
Furthermore, the acquisition's cross-border nature, involving companies based in the United States and the United Kingdom, adds complexity due to the involvement of multiple jurisdictions. This complexity requires careful navigation of different regulatory environments to ensure a smooth transaction.
03/28/2024 - 08:05 AM
Spirent’s business is highly attractive and well-aligned with Keysight’s long-term software-centric solutions strategy
Expected new serviceable available market opportunities of up to US$1.5 billion
Offer is for a cash consideration of 199 pence per share
Spirent’s board of directors intend to unanimously recommend the offer
SANTA ROSA, Calif. & LONDON --(BUSINESS WIRE)--
Keysight Technologies (NYSE: KEYS), today announced its intention to acquire the entire issued and to be issued share capital of Spirent Communications PLC (London Stock Exchange Symbol: SPT) ("Spirent”) for a cash consideration of 199 pence per Spirent share which values Spirent at approximately £1,158 million (US$ $1,463 million 1 ), on a fully diluted basis. Spirent shareholders will also be entitled to receive a special dividend of 2.5 pence per Spirent share, in lieu of any final dividend for the year ended 31 December 2023 (together with the cash consideration of 199 pence per share, the “Offer”).
Spirent’s board of directors intend to unanimously recommend the Offer which is conditional on, among other things, the approval of the requisite majority of Spirent Shareholders at the Court Meeting and the Spirent General Meeting, as well as regulatory approval as laid out in the Offer announcement.
Keysight views 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 and Spirent are both focused on enabling secular technology megatrends across multiple end-markets, including communications, aerospace and defense, automotive, and enterprise sectors. With Spirent’s offerings, Keysight expects to address new serviceable available market opportunities of up to US$1.5 billion .
The acquisition meets Keysight’s strategic and financial M&A criteria, and post integration Keysight expects it to be accretive to Keysight’s gross and operating margins.
Commenting on the acquisition, Satish Dhanasekaran, President & Chief Executive Officer of Keysight, said: “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. 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. With similar cultures valuing customer-centricity and high-performance, we believe that Keysight will be an excellent home for Spirent to thrive and deliver sustainable, long-term growth. Our superior Offer recognizes the value of Spirent’s achievements to-date, and the exciting prospects of the combination of our complementary product portfolios to provide end-to-end solutions for customers across their lifecycle needs.”
There can be no assurance that the proposed transaction, which is detailed in the formal announcement available at https://investor.keysight.com/investor-resources/proposed-acquisition-of-spirent , will be consummated.
About Spirent Communications plc
Spirent Communications plc (LSE: SPT) is the leading global provider of automated test and assurance solutions for networks, cybersecurity, and positioning. The Company provides innovative products, services and managed solutions that address the test, assurance and automation challenges of a new generation of technologies, including 5G, SD-WAN, Cloud, autonomous vehicles and beyond. From the lab to the real world, Spirent helps companies deliver on their promise to their customers of a new generation of connected devices and technologies. Further information about Spirent Communications plc can be found at https://corporate.spirent.com/
About Keysight Technologies
At Keysight (NYSE: KEYS), we inspire and empower innovators to bring world-changing technologies to life. As an S&P 500 company, we’re delivering market-leading design, emulation, and test solutions to help engineers develop and deploy faster, with less risk, throughout the entire product lifecycle. We’re a global innovation partner enabling customers in communications, industrial automation, aerospace and defense, automotive, semiconductor, and general electronics markets to accelerate innovation to connect and secure the world. Learn more at Keysight Newsroom and www.keysight.com .
Source: IR-KEYS
1 Exchange rate used for the conversion of GBP into USD is 1.2626.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240328949831/en/
INVESTOR CONTACT:
jason.kary@keysight.com
MEDIA CONTACT:
keysight@teneo.com
Source: Keysight Technologies
What is the cash consideration per share offered by Keysight Technologies for Spirent Communications PLC?
Keysight Technologies is offering a cash consideration of 199 pence per share for Spirent Communications PLC.
What is the total value of Spirent Communications PLC in the acquisition deal by Keysight Technologies?
The total value of Spirent Communications PLC in the acquisition deal by Keysight Technologies is approximately £1,158 million.
What is the special dividend per share that Spirent shareholders will receive in the acquisition deal?
Spirent shareholders will receive a special dividend of 2.5 pence per share in the acquisition deal by Keysight Technologies.
What market opportunities does Keysight Technologies expect to address with Spirent's offerings?
Keysight Technologies expects to address new serviceable available market opportunities of up to US$1.5 billion with Spirent's offerings.
Who is the President & Chief Executive Officer of Keysight Technologies commenting on the acquisition of Spirent Communications PLC?
Satish Dhanasekaran, President & Chief Executive Officer of Keysight Technologies, commented on the acquisition of Spirent Communications PLC.
