VIAVI to acquire Spirent Communications for $1.27B

March 5, 2024
The combined company will create what the two companies say will be a provider with broader experience spanning test, assurance, and security for R&D labs, service providers, data centers, and mission-critical infrastructure.

VIAVI Solutions is acquiring Spirent Communications for $1.27 billion intending to enhance its ability to serve a broad range of service providers, data centers, and other infrastructure opportunities. 

The two companies expect the acquisition 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 supporting the acquisition.

According to VIAVI and Spirent, combining the two companies “products and technologies provides diversification and accelerated growth in attractive, adjacent verticals, such as cloud service providers, enterprise/IT networks, 5G private networks, 6G+ and positioning, navigation, and timing verticals.”

Spirent provides products, services, and managed solutions that address technologies' test, assurance, and automation challenges, including 5G, software-defined wide area networks (SD-WAN), cloud, and autonomous vehicles. The vendor’s international positioning, navigation, and timing business also address customers' needs in research and development, verification, and integration testing, including testing hybrid positioning and sensor fusion under real-world conditions.

VIAVI said that the complementary nature of the respective businesses will enable various benefits:

Enhanced market position: Merging the two companies' complementary product portfolios and services will enable the combined group to deliver solutions for various markets and applications.

Diversification, growth opportunities: Combining VIAVI and Spirent’s current and future product offerings will position the combined group to bring to market solutions across high-growth cloud service providers, enterprise/IT networks, 5G private networks, 6G+ and positioning, navigation, and timing verticals.

Engineering, research development and design capabilities: VIAVI said 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, about artificial intelligence and machine learning, security, cloud-native architecture and automation. Also, the combined group will benefit from additional financial and operational resources to continue its leadership in research and development and deliver products to new verticals to help customers solve their most complex challenges.

Operational cost synergies: VIAVI said it expects operational efficiencies anticipated to result in annual run-rate cost synergies of up to $75 million approximately two years after the completion of the acquisition.

The CEOs of VIAVI and Spirent expressed support for merging the two companies.

“VIAVI is proud to help enable its global customers to pursue innovation across the wide range of industries it serves,” said Oleg Khaykin, President and CEO of VIAVI. “Combining our leading communications test and measurement and optical technologies and Spirent’s high-performance testing and assurance solutions is expected to deliver enhanced product solutions and applications, accelerate growth in new markets and strengthen innovation through expanded engineering and design capabilities. 

Eric Updyke, CEO of Spirent, agreed and added that combining with VIAVI “brings together a highly complementary product offering which can be marketed globally.” 

“It will enable Spirent to build on the strategic progress we have made with a partner that has the scale and resources to capitalize on the long-term growth opportunities ahead,” he said. “The combination of VIAVI and Spirent creates a stronger business that will be better able to compete, and we are confident in the opportunities this will bring for our stakeholders.”

VIAVI will fund the acquisition via 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. In connection with the Silver Lake investment, Ken Hao, Chairman and Managing Partner of Silver Lake, will join the VIAVI Board of Directors.

Additionally, VIAVI obtained a $100 million five-year revolving credit facility (unfunded at close), committed by Wells Fargo Bank, N.A., to provide additional financial flexibility.

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