Wireless test and measurement specialist Keysight Technologies is to buy the UK's Anite in a cash deal worth £388 million (US$611 million) aimed at expanding its product portfolio. (See Keysight to Buy Anite.)
Keysight Technologies believes a takeover of the much smaller Anite plc will give it a leading position in the wireless test market for both physical and software layers, and also help it to increase revenues from R&D customers.
While Keysight is currently focused on the electronic measurement industry, Anite's technology allows mobile operators and device makers to test their networks and products.
The price Keysight is paying represents a 22% premium to Anite's share price on June 16, before the deal was announced: Anite's stock had risen by 24% on the London Stock Exchange Wednesday morning to 127.6 pence amid speculation that a rival bid might be forthcoming.
Keysight was spun out of Agilent Technologies Inc. (NYSE: A) in November last year, with Agilent indicating the companies "had evolved into two distinct investment and business opportunities" in a statement issued at the time.
Keysight hopes to complete the takeover of Anite by the end of October, but the transaction still requires the approval of regulatory authorities as well as Anite shareholders and any bidding war for Anite might scupper its plans.
Even so, it expects the takeover to be accretive to earnings in the first year after it completes the deal and also reckons the merger will lead to annual cost savings of £13 million ($20 million) within two years of completion.
Keysight generated revenues of about $3 billion in the 12 months to the end of April but said the market had "softened" when reporting results for its February-to-April quarter, when sales slipped to $740 million from $743 million in the year-earlier period.
The company also suffered a year-on-year fall of 13% in net income, to $96 million, in the February-to-March quarter.
According to analysts cited in a Reuters report, a number of Keysight's customers -- including BlackBerry , Motorola and Nokia Corp. (NYSE: NOK) -- have recently cancelled orders amid restructuring activities.
Anite is a minnow by comparison, generating revenues of just £109 million ($172 million) in the year to April 2014 -- down from sales of £113 million ($178 million) in the previous financial year.
The UK player's operating profit fell from £29.7 million ($47 million) to £15.3 million ($24 million) over the same period.
Yet to publish annual results for the year to April 2015, Anite blamed "challenging first-half conditions in the handset testing business" for setbacks in the year to April 2014, noting that "second-half trading [had] improved progressively."
Keysight intends to fund the Anite takeover through existing cash holdings.
— Iain Morris, , News Editor, Light Reading