Suggests that unlike its offer, Keysight’s proposed £1.16bn deal may limit customer choice
US test and measurement company Viavi Solutions has issued a statement responding to competitor Keysight outbidding it to buy Spirent Communications for around £1.16billion. Spirent, which had earlier agreed to a deal with Viavi, withdrew its support as it was around 15% lower than the Keysight offer.
Viavi suggested its own deal had less business overlap with Spirent relative to Keysight and the company believes the Keysight deal would “further entrench Keysight’s leading position in many product segments, which would limit customer choice.”
Spirent recent annual financial results for 2023 showed a 22% drop in revenues to $474.3m (€437m compared with the previous year). Adjusted operating profit fell by 65.1% to $45.2m so a deal was always going to be favoured by its management team because the 2024 capex forecasts for telecom equipment spend among operators aren’t looking much better than 2023.
The proposed acquisition is also further evidence of international companies bidding for low-priced UK firms as that country continues to struggle be dogged by a stagnant economy following Brexit.
With the Spirent Group’s offerings, Keysight believes that it will be able to access new serviceable available market opportunities of up to $1.5bn. Keysight also believes that the Spirent Group’s positioning and navigation technology capabilities will enable it to offer differentiated solutions that cover a wider range of use cases for aerospace and defence, automotive and communications segments.
Keysight was also attracted to Spirent’s capabilities in software, cloud, and automation technologies which it said covers off new and emerging applications, including private and industrial networks. Spirent has around 1500 employees, servicing around 1,100 customers in more than 50 countries. In addition to its headquarters in Crawley, UK, Spirent has a presence in 10 additional locations including Holmdel New Jersey, Calabasas California, Paignton UK, Plano Texas, Honolulu Hawaii, Beijing China and Bangalore India.
Meanwhile, Keysight Group has a large global sales force of over 2,000 individuals servicing a base of over 30,000 customers spread across the world. Spun-off for Agilent Technologies in 2014, it currently has approximately 15,000 employees worldwide and serves over 30,000 customers in more than 100 countries. This includes more than 500 employees working in the UK today across its four active sites. Keysight told Reuters its deal would lead to headcount reductions of less than 5% across the combined group.
Broader reach
“Keysight’s offer for Spirent will provide further opportunities for our employees and strengthens our customer offering, given Keysight’s technology expertise, capabilities and robust global platform with its breadth and depth of industry-leading solutions,” said Spirent CEO Eric Updyke.
“Following my discussions with the Keysight management team, I am excited about the broader reach and expanded long-term prospects for Spirent arising from the combination with Keysight. The market environment remains challenging but with this strong strategic fit, bringing together our complementary services and solutions, we are confident in the opportunities this will bring for our stakeholders,” he added.
Keysight president and CEO Satish Dhanasekaran 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 delivery of its strategic vision.”
He added: “Keysight’s long-term customer relationships, industry expertise and global reach will help Spirent drive product development and execute on its full potential…Our superior offer recognises 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.”