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Anritsu Branches Out With NetTest

Suddenly, the communications test industry is an M&A hotbed. Following the $760 million acquisition of by JDS Uniphase Corp. (Nasdaq: JDSU; Toronto: JDU), which closed last week, Japanese firm Anritsu Corp. is announcing the planned pickup of Danish firm NetTest.

Terms were not disclosed when the deal was announced yesterday. Analysts contacted by Light Reading had no guesses on the price, but NetTest's $94 million in yearly revenues and headcount of 480 would suggest the company went for well more than $100 million. By comparison, Acterna had 1,770 employees and revenues of $440 million. (See Anritsu Acquires NetTest and JDSU Buys Into Testy Market.)

Already one of the top five test-and-measurement vendors, Anritsu could use the deal to shore up its position against market kingpins Agilent Technologies Inc. and Spirent plc (NYSE: SPM; London: SPT). While Anritsu mostly sells to the R&D units of equipment makers, NetTest -- itself a top 10 player in the market -- concentrates on field testers for carriers. Moreover, NetTest has a stronger North American foothold than Anritsu. Thus, the deal would give Anritsu a healthy chunk of new business, says Jessy Cavazos, an analyst with Frost & Sullivan.

NetTest also covers several product areas that Anritsu lacks -- VOIP monitoring, in particular, as Cavazos sees it.

Product breadth is important as telecom carriers continue to mash multiple networks together. "The T&M market is following the same convergence path as the comms world," says Cavazos. "The test companies have to be able to test every technology" in order to keep the big carriers happy.

Spirent, for one, claims to have breadth nailed down, covering the "life cycle" from R&D equipment to field-engineer handheld units, says Parag Sheth, Spirent's senior vice president of corporate marketing.

The JDSU and Anritsu deals could present challenges to that breadth, but Sheth maintains it's too early to know how this might affect the market. He notes that telecom test is becoming a game better suited to large players, in part because of the big-league mergers going on among carriers (see Execs Explain SBC, AT&T Pairing and Qwest Qwits ). "Unless you're a substantial player in this business, you get impacted because when [carriers] are going through the decision process, they're slowed down," he says.

Assuming the Anritsu-NetTest deal goes through, it's likely the companies would pool efforts in devising a new wave of products.

"We would be expecting them to increase their [combined] R&D, so we would expect some new products to get introduced into the market," Cavazos says.

— Craig Matsumoto, Senior Editor, Light Reading

SPecial_Guy 12/5/2012 | 3:05:41 AM
re: Anritsu Branches Out With NetTest GǣAnalysts contacted by Light Reading had no guesses on the price, but NetTest's $94 million in yearly revenues and headcount of 480 would suggest the company went for well more than $100 million.Gǥ

Wow, that was some pretty poor reporting. The terms of the deal were actually disclosed, they just weren't put in the English language press release. A simple review of AnritsuGs IR website shows the deal was valued at $75m, with $52m of it in stock.

Also, why in the world would you base the valuation of a company entirely on its revenue when its annual report gives you dozens of more important measures?
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