Keysight Technologies and Ixia signed a definitive agreement for Keysight to acquire Ixia in an all-cash transaction totaling approximately $1.6 billion in consideration, net of cash. The board of directors of both companies have unanimously approved the transaction, which is anticipated to close no later than the end of October 2017 and is subject to customary closing conditions and approvals, said a statement.
Under the terms of the agreement, Ixia shareholders will receive $19.65 per share in cash. This represents a premium of approximately 45 percent to Ixia's unaffected closing stock price on Dec. 1, 2016, the last trading day prior to media reports that Ixia was considering strategic alternatives, and a premium of approximately 38 percent to the Ixia's unaffected 52-week high closing stock price for the period ended Dec. 1, 2016.
According to company, the deal increases Keysight's SAM by approximately $2.5 billion and establishes a strong position in fast-growing segments. The combined company will serve over 100 countries around the world, and Keysight's worldwide go-to-market strength and sales channel enables Ixia access to previously untapped non-US NEMs, particularly in Asia.
Keysight expects the transaction to be immediately accretive to adjusted earnings with annual cost synergies of $60 million, of which $50 million is expected to be achieved within 24 months. Revenue synergies are expected to be in excess of $50 million by year three and $100 million by year five.
“The proposed acquisition of Ixia is in direct alignment with our strategy to transform Keysight for growth and is 100 percent complementary to our business,” said Ron Nersesian, Keysight president and CEO. “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,” he added.
Ixia has a broad IP portfolio that encompasses network communications, visibility, application and security technologies with solutions deeply rooted in software. Additionally, Ixia's IP includes networking and wireless protocols that will extend Keysight's position in wireless communications and create a combination of Layer 1 through 7 end-to-end solutions that address fast-growing segments of the 5G communications design and test ecosystem.
“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,” said Bethany Mayer, Ixia president and CEO.
The transaction, which is expected to be completed no later than the end of October 2017, is subject to approval by Ixia shareholders, regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as well as other customary closing conditions.