VIAVI to Acquire Spirent Communications plc's High-Speed Ethernet and Network Security Testing Business

Rhea-AI Summary

VIAVI Solutions Inc. (NASDAQ: VIAV) has announced a definitive agreement to acquire Spirent Communications plc's high-speed ethernet and network security business lines from Keysight Technologies for $410 million base cash consideration, plus an additional $15 million contingent payment.

The strategic acquisition, expected to close in Q2 2025, will enhance VIAVI's ethernet testing platform with immediate software, hardware, and protocol domain expertise. The transaction is projected to contribute $180 million to VIAVI's NSE revenue in the first year and become EPS accretive 12 months after closing.

The deal will be funded through a $425 million Term Loan B commitment from Wells Fargo. VIAVI plans to leverage its US net operating losses to reduce the combined group's blended non-GAAP tax rate.

Positive

• Strategic expansion into high-speed ethernet and network security testing
• $180M additional NSE revenue expected in first 12 months
• EPS accretive within 12 months post-closing
• Tax benefits from utilizing US net operating losses

Negative

• Significant debt financing required ($425M Term Loan B)
• Subject to regulatory approval risks
• Integration costs and risks not disclosed

Insights

Financial Analyst

VIAVI's $425 million acquisition of Spirent's high-speed ethernet and network security testing business represents a significant strategic expansion that should enhance its competitive positioning in network testing markets. The deal structure - $410 million base plus $15 million contingent consideration - is being financed through a Term Loan B from Wells Fargo.

The financial metrics look promising: management expects the acquisition to contribute approximately $180 million to VIAVI's Network and Service Enablement revenue in the first year post-closing. While the deal isn't immediately accretive, it's projected to enhance earnings per share within 12 months of closing, suggesting confidence in operational synergies and integration efficiencies.

VIAVI's plan to leverage its US net operating losses to reduce the combined tax burden is a smart tax optimization strategy that should enhance the overall return on investment. This acquisition represents about 7% of VIAVI's current market cap, making it a substantial but manageable transaction that aligns with the company's stated NSE growth strategy.

The timing is noteworthy, with VIAVI stepping in to acquire these business lines from Keysight, which itself is in the process of acquiring Spirent. This sequential transaction suggests VIAVI identified specific high-value segments within Spirent's portfolio that align with its strategic direction, rather than pursuing a broader acquisition of the entire company.

Technology Infrastructure Expert

This acquisition strategically positions VIAVI in several high-growth technology segments. High-speed ethernet testing is becoming increasingly critical as organizations deploy 400G and 800G networks to support data-intensive applications including AI infrastructure. By acquiring Spirent's established business in this space, VIAVI gains immediate advanced capabilities without the time and uncertainty of internal development.

The network security testing component is equally valuable as organizations face escalating cybersecurity threats and regulatory compliance requirements. Comprehensive security validation across enterprise networks, data centers, service provider environments, and government infrastructure represents a persistent market need with strong demand drivers.

From a technology perspective, the complementary nature of the acquisition should enhance VIAVI's existing ethernet testing platform with Spirent's 30 years of expertise in end-to-end network performance validation. This positions VIAVI to offer more comprehensive solutions across network equipment manufacturers, enterprises, service providers, data centers, and government sectors.

The mention of AI infrastructure as a target market is particularly noteworthy. As AI deployment accelerates, the underlying network infrastructure requires specialized testing to validate performance, reliability, and security under the unique traffic patterns and computational demands of AI workloads. This acquisition gives VIAVI enhanced capabilities to address this rapidly expanding market segment.

• Enables VIAVI to offer new solutions in high-speed ethernet and network security testing
• Provides a complementary and synergistic product portfolio across ethernet, security, AI, and digital infrastructure verticals

CHANDLER, Ariz., March 3, 2025 /PRNewswire/ -- VIAVI Solutions Inc. (VIAVI) (NASDAQ: VIAV) today announced that it has signed a definitive agreement to acquire Spirent Communications plc's high speed ethernet and network security business lines (the "High-Speed Ethernet and Network Security Business") from Keysight Technologies, Inc. for $410 million base cash consideration and an additional $15 million contingent cash consideration to be paid at closing, subject to customary closing adjustments and conditions. The acquisition is conditional on regulatory approvals and is expected to close in the second quarter of calendar year 2025, shortly after the close of Keysight's acquisition of Spirent.   

The transaction provides a complementary addition to VIAVI's ethernet testing platform and immediate infusion of software, hardware and protocol domain expertise across network layers to enhance VIAVI's engagement in the growing Ethernet, Security, AI, and digital infrastructure end markets.

"This transaction represents another step in our NSE growth strategy," said Oleg Khaykin, President and CEO of VIAVI. "For the past 30 years, Spirent's High-Speed Ethernet and Network Security Business has facilitated end-to-end test and validation of network performance. This transaction brings to VIAVI an advanced ethernet test and security product portfolio in the NEMs, Enterprise, Service Providers, Data Center Ecosystem and Government segments."

The transaction is expected to add approximately $180 million to VIAVI's NSE revenue in the first 12 months after closing and expected to be accretive to EPS 12 months after closing. VIAVI anticipates utilizing its US net operating losses to lower the combined group's blended non-GAAP tax rate.

Wells Fargo has committed to provide a $425 million Term Loan B to fund the transaction. In addition, VIAVI may elect to increase the amount of the Term Loan B for general corporate purposes on a "best-efforts" basis subject to market conditions. 

About VIAVI
VIAVI (NASDAQ: VIAV) is a global provider of network test, monitoring and assurance solutions for telecommunications, cloud, enterprises, first responders, military, aerospace and railway. VIAVI is also a leader in light management technologies for 3D sensing, anti-counterfeiting, consumer electronics, industrial, automotive, government and aerospace applications. Learn more about VIAVI at www.viavisolutions.com. Follow us on VIAVI Perspectives, LinkedIn and YouTube.

Advisors
Qatalyst Partners is acting as financial advisor to VIAVI and Fried, Frank, Harris, Shriver & Jacobson is serving as legal counsel.

Safe Harbor
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements include, but are not limited to, information regarding the ability of VIAVI and Keysight to complete the acquisition, including the satisfaction of the conditions to the consummation of the acquisition, and the expected, estimated and anticipated impact of the transaction of VIAVI's future financial results. These forward-looking statements involve risks and uncertainties that could cause VIAVI's results to differ materially from management's current expectations. Such risks and uncertainties include, but are not limited to, unforeseen changes in the strength of customers' businesses and high growth markets; unforeseen changes in the demand for current and new products, technologies, and services; customer purchasing decisions and timing; unforeseen changes in future revenues, earnings and profitability of VIAVI or the High- Speed Ethernet and Network Security Business; the risk that VIAVI is not able to realize the savings or benefits expected from integration of the High-Speed Ethernet and Network Security Business; the risk that the required regulatory approvals for the proposed acquisition are not obtained, are delayed or are subject to conditions that are not anticipated; and those risks and uncertainties discussed in VIAVI's Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 16, 2024 and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on January 31, 2025.

The forward-looking statements included in this release are valid only as of today's date except where otherwise noted. Viavi Solutions Inc. undertakes no obligation to update these statements.

Media Inquiries:
Grand Bridges
Emma Jenkins
emma@grandbridges.com
+1 415 800 4529

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SOURCE VIAVI Solutions

FAQ

What is the total value of VIAV's acquisition of Spirent's ethernet testing business?

The total value is $425 million, comprising $410 million base cash consideration and $15 million contingent cash payment at closing.

When is VIAV's acquisition of Spirent's ethernet business expected to close?

The acquisition is expected to close in the second quarter of calendar year 2025, following regulatory approvals.

How much additional revenue will VIAV generate from this acquisition?

The acquisition is expected to add approximately $180 million to VIAVI's NSE revenue in the first 12 months after closing.

How is VIAV financing the Spirent ethernet business acquisition?

Wells Fargo has committed to provide a $425 million Term Loan B to fund the transaction.

What are the expected financial benefits of VIAV's Spirent acquisition?

The acquisition is expected to be EPS accretive 12 months after closing, with VIAVI utilizing US net operating losses to lower the combined group's non-GAAP tax rate.