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Keysight Technologies to acquire Ixia for $1.6 billion

Test and measurement company Keysight Technologies plans to buy Ixia in an all-cash transaction worth approximately $1.6 billion, net of cash. The board of directors of both companies have unanimously approved the deal, which is expected to close by the end of October 2017, subject to customary closing conditions and approvals.

Reuters reported last week that Keysight was close to an acquisition of Ixia, citing people familiar with the matter. Ixia had other suitors according to the report, and the outcome was not certain.

But now the deal is done. Under the terms of the agreement, Ixia shareholders will receive $19.65 per share in cash. This represents a substantial premium of 45 per cent to Ixia’s stock price on 1 December 2016, the last trading day prior to media reports that Ixia was considering strategic alternatives. It also represents a premium of 38 per cent to Ixia’s unaffected 52-week high closing stock price for the period ended on that day.

The pair position the deal as one that brings together two highly complementary companies to create a force in test and measurement technologies that span electronic design, device and network validation, and application and security performance.

Founded in 1997, Ixia has a broad portfolio that encompasses network communications, visibility, application and security technologies with many of its offerings deeply rooted in software. Historically an IP/Ethernet testing house, the acquisition of Catapult Communications in June 2009 established Ixia as a player in the wireless market.

That wireless protocol and networking expertise is one of the main attractions for Keysight. The former Agilent division expects the acquisition will enhance its position in wireless communications by creating a unique combination of Layer 1 through 7 end-to-end products and services to address fast-growing segments of the 5G communications design and test ecosystem.

Commenting on the acquisition, Ron Nersesian, Keysight president and CEO, said: “The combination creates a powerful innovation engine to fuel growth, expands our software-centric solutions and builds new opportunities through sales and technology leverage. Ixia also brings a world-class level of talent, and together, we will provide leading-edge solutions that address the fastest-growing communications and networking trends including 5G, IoT, visibility, security and application performance.”

Bethany Mayer, Ixia president and CEO, added: “We are confident that Keysight is the ideal partner to accelerate our growth initiatives and will continue to build upon our successful 20-year history. Ixia and Keysight share many of the same values … We also have industry leading IP portfolios that are complementary, deep technical prowess and amazing teams.”

Keysight says the deal increases its addressable market by approximately $2.5 billion and establishes a strong position in fast-growing segments. The company expects the transaction to be immediately accretive to earnings and hopes to achieve $50 million in annual cost savings within two years. Revenue synergies are expected to exceed $50 million in year three and reach $100 million by year five.

The combined company will serve more than 100 countries around the world, and Keysight’s worldwide go-to-market strength and sales channel will give Ixia access to previously untapped non-US network equipment manufacturers, particularly in Asia.

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