Viavi Solutions has announced its agreement to acquire Spirent Communications, a move that is expected to create a leading provider of test, assurance, and security solutions for research and development labs, service providers, data centers, and mission-critical infrastructure. The acquisition price values Spirent at approximately £1,005 million, or $1,277 million based on the British pound sterling to U.S. dollar exchange rate on March 4, 2024.
The acquisition is expected to result in annual run-rate cost synergies of up to $75 million approximately two years after its completion. Viavi anticipates utilizing its US net operating losses to lower the combined group’s blended non-GAAP tax rate. Additionally, Silver Lake will make a $400 million long-term strategic investment in Viavi Solutions in connection with the acquisition.
Spirent provides products, services, and managed solutions that address the test, assurance, and automation challenges of technologies such as 5G, software-defined wide area networks (SD-WAN), cloud, and autonomous vehicles. The company's international positioning, navigation, and timing business also addresses the needs of customers in research and development, verification, and integration testing, including the testing of hybrid positioning and sensor fusion under real-world conditions.
The acquisition is expected to bring together highly complementary product portfolios, enabling the combined group to deliver solutions for various markets and applications. It will also provide diversification and accelerated growth in attractive, adjacent market verticals, such as cloud service providers, enterprise/IT networks, 5G private networks, 6G+, and positioning, navigation, and timing verticals.
Viavi believes that building on the combined expertise of the engineering, research and development, and design teams of both Viavi and Spirent will result in greater engineering, research and development, and design capabilities to accelerate new technology development and product innovation, particularly with regard to artificial intelligence and machine learning, security, cloud-native architecture, and automation.
The acquisition will be funded by Viavi’s existing cash, a fully committed $800 million 7-year term loan from Wells Fargo Bank, N.A., and a $400 million investment from Silver Lake in the form of a fully committed senior convertible note.
The acquisition is expected to close during the second half of 2024, subject to shareholder approvals and other customary closing conditions, including Spirent shareholder approval and certain regulatory closing approvals. The Spirent directors who hold shares of Spirent have signed irrevocable agreements in support of the acquisition. Today the company's shares have moved 0.6% to a price of $11.02. For the full picture, make sure to review Viavi Solutions's 8-K report.
