The agreed acquisition of Spirent Communications by Keysight Technologies has entered the next phase, with the latter proposing several divestments while a number of European regulators have greenlit the $1.5 billion takeover.
To address regulatory concerns, Fortune 500 company Keysight said it is planning to divest Spirent’s high-speed ethernet and network security business lines.
Keysight, mostly focused on testing and metering across different industries, is increasingly pushing into the software testing space.
In 2020, the software multinational paid around $330 million for Eggplant, a Carlyle Group-backed test automation company that was run Edinburgh, UK-based entrepreneur George Mackintosh.
Founded in 2008, Eggplant has established itself as a leader in software test automation, with a platform that uses artificial intelligence and analytics to automate test creation and test execution.
This year Keysight has set its sights on Spirent, a network testing business that traditionally focused on the telecoms space, but is increasingly branching out into the financial services space.
In March, Keysight agreed to acquire Spirent for 201.5 pence per share, which included a 2.5 pence special dividend, thereby giving Spirent an equity valuation of around $1.5 billion.
Spirent employs more than 1,500 people and serves approximately 1,100 customers in over 50 countries. Keysight’s acquisition would result in a headcount reduction of less than 5% across the combined group, the company pledged at the time of the deal announcement.
Regulatory approvals
Keysight confirmed this week that the first regulatory hurdles have been crossed as it stated that the French Ministry for the Economy, Finance, and Industry granted the companies a conditional authorisation of the acquisition.
In addition, Keysight said that the deal has been approved by the German Federal Ministry for Economic Affairs and Climate Action and by the UK’s Chancellor of the Duchy of Lancaster under the UK’s National Security and Investment Act 2021.
“The precise timing for closing of the acquisition remains subject to the pending regulatory clearances,” Keysight wrote in a statement.
“The parties continue to keep the timetable under close review and will provide any updates as required,” it added.
Keysight said Chinese regulators have not yet approved the takeover.
The company has been engaging with the State Administration for Market Regulation of the People’s Republic of China, the SAMR.
“Keysight and Spirent are committed to continued engagement with SAMR to obtain clearance for the acquisition under the Anti-Monopoly Law of the People’s Republic of China, and accordingly filed the Acquisition for clearance by SAMR on November 25, 2024,” the firms stated.
Viavi ‘waiting in the wings’
The Keysight-Spirent deal progress is closely monitored by Viavi, whose initial bid for Sprint was rejected in favour of a deal with Keysight.
Several news outlets, including Reuters, wrote recently that IT provider Viavi is “waiting in the wings” in case the proposed takeover will strand due to regulatory headwinds.
Despite multiple approvals in European markets, doubts are reportedly growing about a successful outcome of the deal since Spirent’s shares are trading lower than what Keysight agreed to pay, causing analysts to speculate this could reflect regulatory approval concerns.
Spirent initially embraced a $1.4 billion offer by Viavi, before ditchibg the latter and opting for the Keysight bid instead, calling it a “superior proposition”.
Keysight argued that a tie-up with Spirent enables the two entities to launch a much broader product range than Viavi. Moreover, it proposed a specific deadline with April 2025 for the takeover to be approved.
Viavi, on the other hand, warned that, compared to Keysight, it has “limited business overlap with Spirent”.
In case Viavi does decide to put forward another offer, it will need approval in the UK as competition regulations in Britain state there should be a 12-month period in between different bids.
NEXT WEEK
QA FINANCIAL FORUM LONDON: RECAP
Last month, on September 11, QA Financial held the London conference of the QA Financial Forum, a global series of conference and networking meetings for software risk managers.
The agenda was designed to meet the needs of software testers working for banks and other financial firms working in regulated, complex markets.
Please check our special post-conference flipbook by clicking here.
READ MORE
- Taking place TODAY: the QA Financial Forum Chicago 2025
- HDFC Bank turns to Katalon and QualityKiosk for QA upgrade
- Perforce’s Clinton Sprauve on AI testing for charts and graphics
- Functional and regression testing crucial for banks, says insider
- Shastic teams up with MeridianLink to target banks with AI automation
Become a QA Financial subscriber – for FREE
* Receive our weekly newsletter * Priority invitations to our Forum events
