LONDON, Sept 20 (Askume) – U.S. IT communications specialist Viavi Solutions is considering whether it could make another bid for telecoms test group Spirent Communications if rival Keysight Technologies fails to acquire it, according to people familiar with the matter.
Keysight Technologies (KEYS.N) acquired Viavi (VIAV.O) in an all-cash tender offer in March .(SPT.L) is valued at $1.5 billion, and the deal is currently in the approval process.
But two people who spoke on condition of anonymity said Spirent’s shares were trading at a 14.5% discount to Keysight’s 201.50 pence purchase price, which some analysts said reflected concerns about the acquirer’s ability to obtain competition approval.
Viavi must obtain approval from the UK takeover regulator before making another takeover bid, as UK takeover rules prevent it from making another takeover bid within 12 months after the previous bid expired in May.
Viavi, Keysight Technologies and Spirent declined to comment.
At the time of the bid, Keysight’s offer represented an 85.9% premium to London-listed Spirent’s closing price of 108.4 pence on March 4, which was significantly higher than Viavi’s 61.4% premium.
Keysight Technologies said it expects to receive approval for the acquisition of Spirent by the end of April next year and that the acquisition will integrate “complementary” products and bring “strategic” synergies.
Spirent said in August that it and Keysight were working with US and European authorities to obtain antitrust approval and expected the deal to be completed before then.
Keysight signed a collaboration agreement that includes a “no matter what” commitment to support efforts to obtain regulatory approval.
Viavi said in its original proposal that it had “limited business overlap with Spirent” relative to Keysight and that its rival’s proposed merger would limit customer choice.
Analysts said regulators are likely to object to the tie-up because it could result in Keysight controlling more than 80% of the high-speed Ethernet (HSE) telecoms test market.
The companies also overlap in other product areas such as security and navigation, and analysts say Keysight may need to sell assets to gain regulatory approval.
A third person familiar with the matter said the deal with Keysight Technologies is progressing as Spirent expected and that a sale would be considered including its Ethernet test business.
It’s part of Spirent’s Networking & Security segment, which results show accounts for more than 55% of its revenue.
The discount on Spirent shares reflects a broader trend of deals facing greater regulatory scrutiny, a third person said.
Spirent’s August results also showed that the company’s revenue fell 12% to $197.3 million in the first half of 2024 as the economic slowdown is expected to continue in the second half of the year, reducing customer spending.
The company said that the delay in the contract was also due to the hesitation of the customers after the news of the acquisition broke.
