Keysight's Acquires Ixia for $1.6 Billion to Create a Powerful Innovation Engine

Keysight Technologies has signed a definitive agreement to acquire Ixia in an all-cash transaction totaling approximately $1.6 billion in consideration, net of cash.

Ixia provides testing, visibility, and security solutions, strengthening applications across physical and virtual networks for enterprises, service providers, and network equipment manufacturers. They offer companies trusted environments in which to develop, deploy, and operate. Customers worldwide rely on Ixia to verify their designs, optimize their performance, and ensure protection of their networks to make their applications stronger.

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.

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

The combination of Keysight and Ixia brings together two highly complementary companies to create an innovative force in leading-edge technologies that spans electronic design, device and network validation, and application and security performance. 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 extensive networking and wireless protocols that will extend Keysight’s position in wireless communications and create a unique combination of Layer 1 through 7 end-to-end solutions that address fast-growing segments of the 5G communications design and test ecosystem.

Benefits of the Combination

  • Accelerates Keysight’s Growth by Creating a Powerful Innovation Engine: Enables a unique combination of Layer 1 through 7 end-to-end solutions for assessing performance from the mobile device to the data center and the cloud. Also expands Keysight’s software capabilities by adding engineering talent and software-centric solutions with a high gross-margin profile.
  • Enhances Scale, Expands SAM and Deepens Market Penetration: 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.
  • Combines Global Talent and Advances Innovation Culture: The combination brings together two world-class organizations with innovative culture and common values that will help drive strong collaboration and innovation.
  • Compelling Financial Profile: The combined company will have an attractive financial profile with enhanced cash flow driven by synergies, scale and improved revenue growth.
  • Immediately Accretive: 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.