SANTA ROSA, Calif. & LONDON - Keysight Technologies (NYSE: NYSE:KEYS), a prominent player in design and test solutions, has announced its plan to acquire Spirent Communications PLC (LSE: LON:SPT), a leader in test and assurance solutions for networks and other technologies.
The acquisition, valued at approximately £1,158 million (US$1,463 million), entails a cash transaction of 199 pence per Spirent share. Spirent shareholders are also set to receive a special dividend of 2.5 pence per share.
Spirent's board of directors is expected to unanimously recommend the offer, which hinges on conditions such as approval by Spirent shareholders and regulatory clearances. The acquisition aligns with Keysight's long-term strategy focused on software-centric solutions and is anticipated to be accretive to Keysight's gross and operating margins post-integration.
Satish Dhanasekaran, President & CEO of Keysight, commented on the acquisition, highlighting the strategic fit and shared focus on high-value solutions for customers. The union of Keysight's global reach and Spirent's portfolio is expected to drive product development and address market opportunities estimated at up to US$1.5 billion.
Spirent, known for its automated test and assurance solutions, has been at the forefront of supporting emerging technologies like 5G, autonomous vehicles, and cloud services. Keysight's acquisition is poised to expand its serviceable market and enhance its offerings across various sectors, including communications, aerospace, defense, automotive, and enterprise.
This news is based on a press release statement from Keysight Technologies.
InvestingPro Insights
As Keysight Technologies (NYSE: KEYS) sets its sights on acquiring Spirent Communications PLC, investors and industry analysts are closely monitoring Keysight's financial health and market position. According to real-time data from InvestingPro, Keysight boasts a market capitalization of $27.2 billion, underscoring its substantial presence in the design and test solutions market.
The company's Price-to-Earnings (P/E) ratio stands at 28.35, with an adjusted P/E ratio for the last twelve months as of Q1 2024 at 28.22. This valuation metric suggests that investors are willing to pay a premium for Keysight's earnings, potentially due to its strong market position and future growth prospects. Additionally, the company's Price to Book (P/B) ratio is at 5.65, which reflects the market's valuation of the company's net assets.
An InvestingPro Tip indicates that analysts predict Keysight will be profitable this year, which aligns with the company's strategy to enhance its software-centric solutions through acquisitions like that of Spirent. Furthermore, Keysight's solid financial footing is illustrated by another InvestingPro Tip highlighting that its liquid assets exceed short-term obligations, providing the company with financial flexibility to pursue strategic initiatives.
For investors seeking a more comprehensive analysis, additional InvestingPro Tips are available, offering insights into the company's sales outlook, stock volatility, and debt levels. Utilizing the promo code PRONEWS24, readers can access these tips and receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, broadening their investment perspective on Keysight Technologies.
Investors can also note that Keysight Technologies does not pay a dividend to shareholders, which could be an important consideration for those seeking regular income from their investments. However, this may also suggest that the company is reinvesting its earnings back into the business to fuel further growth, a strategy that could benefit long-term shareholders, especially in light of the potential market opportunities post-acquisition.
As Keysight Technologies continues to navigate its acquisition of Spirent, staying informed with the latest financial metrics and expert analysis will be key for stakeholders. The formal announcement of the acquisition's completion will be eagerly awaited by the market, with further details to be disclosed on Keysight's investor relations website.
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