Keysight Technologies is taking crucial steps towards completing its acquisition of Spirent Communications, as it moves to satisfy regulatory requirements and clear the final hurdles before finalising the deal. The planned acquisition, which was approved by Spirent shareholders on May 22, 2024, is on track for closure in the first half of Keysight’s fiscal year, which ends on April 30, 2025. However, to meet regulatory stipulations, Keysight has committed to divesting certain business units from Spirent, namely its high-speed ethernet and network security operations.
This move is a direct response to regulatory concerns that could arise from the combined entity’s market position. To mitigate any anti-competitive risks, Keysight is set to offload Spirent’s ethernet business through a competitive auction process, aiming to complete the divestiture in tandem with the finalisation of the acquisition. This action is a necessary condition for securing the green light from global regulators.
Navigating Regulatory Approvals: A Global Effort
Since the deal’s announcement, Keysight has made significant progress in obtaining the required regulatory clearances from various jurisdictions. As of November 2024, the company successfully filed for clearance with China’s State Administration for Market Regulation (SAMR), in compliance with the country’s Anti-Monopoly Law. This was a key step in ensuring the acquisition meets China’s stringent market control requirements.
In addition to SAMR’s approval, Keysight has already secured regulatory sign-offs from European authorities. The French Ministry for the Economy, the German Federal Ministry for Economic Affairs, and the UK government have all granted approval, with the latter notably reviewing the acquisition under national security provisions. These approvals mark significant milestones in Keysight’s acquisition process, allowing the companies to move forward with confidence as they address any remaining regulatory reviews.
The Path to Completion: What’s Next for Keysight and Spirent?
Despite the progress made with regulatory bodies, the acquisition is still pending final approval from some authorities. Keysight’s management is working closely with all relevant parties to ensure that the deal complies with global competition laws and regulations. The company has reiterated that it is fully committed to closing the transaction within the current fiscal year, with expectations for completion before April 30, 2025.
Once complete, the acquisition will position Keysight as a leader in high-performance test and simulation solutions for next-generation communications networks. Spirent’s expertise in network testing and assurance, particularly in high-speed ethernet and network security, will complement Keysight’s already extensive portfolio, opening up new opportunities for growth in critical technology markets.
Divestiture of Spirent’s Ethernet and Network Security Business
A critical component of the deal is the divestiture of Spirent’s high-speed ethernet and network security business. To facilitate this, Keysight plans to conduct a competitive auction, ensuring that the businesses are sold to a suitable buyer who meets regulatory requirements. This process will likely attract interest from other players in the tech and communications sectors, eager to acquire Spirent’s valuable assets.
The divestment is also essential for ensuring that the acquisition does not stifle competition in these high-demand segments. High-speed ethernet and network security are crucial for the ongoing expansion of modern communications infrastructure, and regulatory bodies are keen to ensure that no single entity becomes too dominant in these areas.
What This Means for the Future of Keysight and Spirent
While the divestiture and regulatory hurdles may present challenges, they also offer opportunities for both companies. For Keysight, completing the acquisition and integration of Spirent will solidify its position in the global test and measurement market, particularly in areas related to high-speed networking, 5G, and cybersecurity. The expanded portfolio will help Keysight better serve the rapidly evolving needs of the telecommunications and technology sectors.
For Spirent, the deal provides an opportunity to refocus on its core business operations while partnering with a key player in the test and measurement industry. The sale of its ethernet and network security lines also allows Spirent to streamline its offerings, concentrating on its core competencies in network testing and performance assurance.
