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Viavi Set to Acquire Spirent's Ethernet Business: Stock to Gain?
VIAVViavi Solutions(VIAV) ZACKS·2025-03-04 18:25

Core Viewpoint - Viavi Solutions Inc. has entered into a definitive agreement to acquire the high-speed ethernet and network security business of Spirent Communications for a total transaction value of 425million,withcompletionexpectedbyQ22025,pendingregulatoryapprovals[1][2].Group1:AcquisitionDetails−Theacquisitionisvaluedat425 million, with completion expected by Q2 2025, pending regulatory approvals [1][2]. Group 1: Acquisition Details - The acquisition is valued at 410 million in base cash consideration and 15millionincontingentcashconsideration[1].−ViavipreviouslyattemptedtoacquireSpirentforapproximately15 million in contingent cash consideration [1]. - Viavi previously attempted to acquire Spirent for approximately 1.3 billion, but Keysight Technologies made a higher bid of around 1.46billion,whichwasapprovedbySpirentshareholders[2].−KeysightplanstodivestSpirent′shigh−speedethernetandnetworksecuritybusinessestofacilitateregulatoryapprovalforitsacquisitionofSpirent[2][3].Group2:StrategicAdvantages−TheacquisitionwillenhanceViavi′sproductportfoliobyintegratingSpirent′sofferings,whichincludeethernettestingandnetworksecuritysolutions[4][6].−ThisintegrationisexpectedtobolsterViavi′sethernettestingplatformandimproveitscommercialprospectsinrapidlygrowingmarketssuchassecurity,ethernet,datacenter,AI,anddigitalinfrastructure[6].−Thetransactionisanticipatedtoadd1.46 billion, which was approved by Spirent shareholders [2]. - Keysight plans to divest Spirent's high-speed ethernet and network security businesses to facilitate regulatory approval for its acquisition of Spirent [2][3]. Group 2: Strategic Advantages - The acquisition will enhance Viavi's product portfolio by integrating Spirent's offerings, which include ethernet testing and network security solutions [4][6]. - This integration is expected to bolster Viavi's ethernet testing platform and improve its commercial prospects in rapidly growing markets such as security, ethernet, data center, AI, and digital infrastructure [6]. - The transaction is anticipated to add 180 million in revenues to Viavi's Network and Service Enablement segments within the first 12 months post-acquisition [7]. Group 3: Financial Performance - The acquisition is expected to be accretive to Viavi's financial performance, likely enhancing its earnings per share (EPS) within 12 months after closing [7]. - Viavi's stock has gained 10.9% over the past year, compared to the industry's growth of 26.9% [8].