British telecoms testing services provider Spirent Communications has agreed to be sold to US communications equipment firm Viavi in a deal valuing it at £1bn amid a plunge in profits.
London-listed Spirent’s market capitalisation as of Monday’s close was £626m. Under the agreement, Viavi said it would buy Spirent for 172.5p per share in cash, a 61 per cent premium to Spirent shares’ closing price of 108p on Monday.
The deal also includes a special dividend of 2.5p per Spirent share, in place of any final dividend for 2023.
As part of the acquisition, US private equity firm Silver Lake is making a $400m long-term strategic investment in Viavi.
The acquisition of Spirent requires at least 75 per cent shareholder approval and “the satisfaction of certain regulatory conditions”, the company said. Spirent expected the scheme to become effective during the second half of 2024.
News of the acquisition came as Spirent published its full-year results for 2023.
The firm’s reported pre-tax profit came in at $22.9m (£18m), plunging 80 per cent from $114.6m (£90.4m) in 2022. Revenues also fell sharply to $474.3m (£374) from $607.5m (£479m), with Spirent blaming “challenging market conditions”.
Meanwhile, its adjusted operating profit was $45.2m (£36m), down from $129.5m (£102m) in 2022 but in line with revised market consensus.
“Spirent is a business with a differentiated value proposition, diversified portfolio of technology solutions, deep customer relationships and talented people. Despite these strengths, we recognise that the Spirent Group has been operating against an increasingly challenging market backdrop,” said Spirent chair Sir Bill Thomas.
“With its strong management team, global scale and the cultural alignment between our businesses we are confident that in the Viavi Group we have found the right owner to take Spirent on to the next phase of its growth story.”
Chief executive Eric Updyke added that “significant challenges due to the macro backdrop and the impact of this on our core end markets” were “likely to continue for some time”.
Oleg Khaykin, president and CEO of Viavi, commented: “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.”