Test & Measurement

Spirent Splashes $40M on Cloud M&A

Spirent Communications plc is to buy applications test system specialist Mu Dynamics for US$40 million, a move that Spirent hopes will make it a major player in the cloud services and service delivery platform testing market. (See Spirent to Buy Mu Dynamics.)

The deal, set to close on April 23, will see Spirent pay cash for a company that has focused on the niche Service Provider Information Technology (SPIT) area of applications security testing, which is becoming increasingly important as the cloud services market grows.

Mu's systems cover all manner of applications across multiple network types, including mobile broadband (Long Term Evolution (LTE)) and IPv6, and are used by network operators, hardware and software vendors and government organizations. (See Mu Dynamics Opens Its LTE Apps Toolbox .)

Customers include Alcatel-Lucent (NYSE: ALU), Cisco Systems Inc. (Nasdaq: CSCO), HP Inc. (NYSE: HPQ), Juniper Networks Inc. (NYSE: JNPR), SK Telecom (Nasdaq: SKM), Telus Corp. (NYSE: TU; Toronto: T) and Verizon Communications Inc. (NYSE: VZ).

Mu recently launched a service, called Blitz.io, that allows applications developers to test what sort of experience users would encounter with a specific software-as-a-service (SaaS) cloud application.

Spirent, which in time will integrate Mu's capabilities into its existing test platform portfolio as well as support Mu's existing product lines, expects to generate up to $10 million in revenues from its new acquisition during the remainder of this year (about eight months, so at an annual run rate equivalent to $15 million), and for those revenues to deliver operating profits.

In 2013, Spirent expects Mu to contribute between $17 million and $19 million in revenues and enhance the parent company's earnings.

Spirent, which saw its share price on the London exchange edge up by 0.4 percent today to 167.8 pence, recently announced 2011 operating profits of $122 million. (See Spirent 2011 Operating Profit Hits $122M.)

Mu Dynamics was backed by venture capital firms such as Accel Partners , Benchmark Capital , DAG Ventures Management and Focus Ventures and had raised more than $24 million in three rounds of funding.

Why this matters
This might not be the biggest acquisition in the comms sector, and Mu Dynamics is a niche company, but this is a significant move from one of the key players in the test and measurement sector.

Mu Dynamics is already a trusted and well respected firm that has developed systems that can emulate the impact that applications can have on enterprise and wide-area fixed and mobile networks and that's going to become a critical focus for many companies as cloud services become more popular and as IP-based 4G networks are rolled out. (See 4G Forces Mobile Security Rethink .)

This acquisition isn't costing Spirent that much and although its revenue projections for 2013 from Mu are still below the $20 million mark, this looks like a deal that will bring a lot more associated business and credibility Spirent's way, as long as it handles the post-acquisition process well and doesn't lose key staff.

For more
— Ray Le Maistre, International Managing Editor, Light Reading

Towelie 12/5/2012 | 5:35:33 PM
re: Spirent Splashes $40M on Cloud M&A

Too little, too late I imagine

AnkurChadda 12/5/2012 | 5:35:33 PM
re: Spirent Splashes $40M on Cloud M&A

Have you seen Blitz.io. It's an impressive concept.

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