Keysight Technologies has recently completed the acquisition of Spirent, Optical Solutions Group, and PowerArtist, marking a significant advancement in the company's software-centric solutions strategy. This move is aligned with long-term growth drivers such as AI, 6G, space and satellite, and automotive sectors.
The estimated financial impact of the acquisitions is substantial, with a capital deployment of approximately $1.7 billion. The acquisition of Spirent, net of divestiture proceeds, accounted for around $1.1 billion, while the combined acquisition of Optical Solutions Group and PowerArtist amounted to approximately $0.6 billion. The company settled these transactions with balance sheet cash, leaving a post-transaction cash balance of over $1.5 billion, gross leverage of less than 2x, and net leverage of less than 1x.
In terms of financial performance, the acquisitions are expected to add around $375 million of revenue with an aggregate gross margin exceeding 75%. The overall software mix is projected to expand by around 300 basis points, and the acquisitions are anticipated to be immediately accretive to gross margin, with expected operating margin accretion post-integration. Furthermore, the acquisitions are projected to be EPS accretive within 12 months post-close.
With these acquisitions, Keysight has expanded its served addressable market by approximately $1.25 billion. The company's software-centric solution portfolio has been bolstered, leading to an increase in Annual Recurring Revenue (ARR) and complementary capabilities in adjacent markets such as live network assurance and positioning technologies.
The Spirent acquisition specifically enhances Keysight's portfolio with leading positioning, navigation emulation, and validation solutions. It adds capabilities in lab-grade simulation, real-world record/playback, and expert services for defense, space, automotive, and handset/chipset applications. The acquisition also strengthens Keysight's 6G strategy by providing resilient positioning and non-terrestrial network validation, as well as complementary wireless capabilities including Wi-Fi.
The acquisitions also expand Keysight's design engineering software portfolio, particularly in system-level simulation and emulation, with a focus on high-performance and multi-physics workflows. This positions Keysight to lead in next-generation system simulation, optical modeling, and power-aware design. The company gains significant domain expertise in photonics, optics, and multi-physics simulation, complementing its existing capabilities in these areas.
Today the company's shares have moved -0.14% to a price of $162.19. For the full picture, make sure to review Keysight Technologies's 8-K report.
