“The proposed acquisition of Ixia is in line with our strategy to position Keysight for growth and is a perfect complement to our existing business,” explains Ron Nersesian, president and CEO of Keysight. “This combination creates a powerful innovation engine to drive growth, expands our software-based solutions, and generates new opportunities by leveraging our sales and technology teams. Ixia also brings world-class talent, and together we will deliver cutting-edge solutions that address rapidly growing communications and networking trends, such as 5G, the Internet of Things (IoT), application visibility, security, and performance.”.
The combination of Keysight and Ixia unites two highly complementary companies to create an innovative force in cutting-edge technologies encompassing electronic design, device and network validation, and application performance and security. Ixia boasts a broad intellectual property portfolio that includes network communications, visibility, application, and security technologies with highly software-based solutions. Furthermore, Ixia's intellectual property covers numerous network and wireless protocols that will expand Keysight's position in mobile communications and create a unique combination of comprehensive Layer 1-7 solutions for the rapidly growing segments of the 5G communications design and testing ecosystem.
“We are confident that Keysight is the ideal partner to accelerate our growth initiatives, and we will continue to build on our successful 20-year legacy,” said Bethany Mayer, President and CEO of Ixia. “Ixia and Keysight share many values, including our dedication to cutting-edge technology innovation and our commitment to operational excellence and financial discipline, which combine to create shareholder value. We also have complementary, industry-leading intellectual property portfolios, deep technical expertise, and fantastic teams. We believe that together, Ixia and Keysight have a tremendous opportunity to further strengthen our market leadership positions and create unprecedented value for our customers, partners, employees, and shareholders. The transaction also provides Ixia shareholders with significant cash value and a substantial premium over the market.”.
Benefits of the merger
• Accelerates Keysight's growth by creating a powerful innovation entity: It brings a unique combination of comprehensive Layer 1-7 solutions for evaluating performance across mobile devices, data centers, and the cloud. It also expands Keysight's software capabilities by adding engineering talent and software-based solutions with a high-gross-margin profile.
• Improves scale, expands software asset management, and enables greater market penetration: It increases Keysight's software asset management by approximately $2.5 billion and establishes a strong position in fast-growing segments. The combined company will have a presence in more than 100 countries, and Keysight's go-to-market strength and global sales pipeline enable Ixia to access new and emerging markets it previously lacked, particularly in Asia.
• Combines global talent and drives a culture of innovation: This combination unites two world-class companies with an innovative culture and shared values that will foster close collaboration and robust innovation.
• Attractive financial profile: The resulting company will have an attractive financial profile with improved cash flow thanks to synergies, scale, and higher earnings growth.
• Immediate incremental growth: Keysight expects the transaction to deliver immediate incremental growth in adjusted earnings, with annual cost synergies of $60 million, of which $50 million is expected to be realized within 24 months. Revenue synergies are anticipated to exceed $50 million by year three and $100 million by year five.
Timing and Authorizations
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 completion of the applicable waiting period under the US Hart-Scott-Rodino Antitrust Act) and other customary closing conditions.
Keysight has entered into voting agreements with Errol Ginsberg, Chairman of the Board of Ixia, and Katelia Capital Group, Ltd., which together own approximately 23% of the outstanding ordinary shares of Ixia, under which shareholders have agreed that their shares will vote in favor of the transaction.
