Santa Rosa-based Keysight Technologies on Monday reported it will acquire Ixia, a California technology company, in a deal valued at $1.6 billion.
The cash transaction is expected to close by the end of October. Shareholders of Calabasas-based Ixia will receive $19.65 per share in cash, a premium of 45 percent over Ixia’s closing share price on Dec. 1.
In 2016, Ixia had total revenue of nearly $500 million. Keysight's 2016 revenue was nearly $2.9 billion.
“The combination creates a powerful innovation engine to fuel growth, expands our software-centric solutions and builds new opportunities through sales and technology leverage,” said Ron Nersesian, Keysight’s president and CEO.
Ixia has a broad IP (Internet protocol) portfolio that includes network communications, network visibility, and application and security software, Keysight said in describing what made the deal attractive. Ixia has extensive networking and wireless protocols that will boost Keysight’s position especially in emerging 5G (fifth generation) communications, expected for early rollout in a couple of years.
Network visibility helps engineers monitor Internet traffic to spot malware invasions by establishing what normal traffic looks like then identifying anomalies. Security experts cope with huge numbers of network entry points as users become more mobile and access the Internet with multiple devices.
“Keysight is the ideal partner to accelerate our growth initiatives and will continue to build upon our successful 20-year history,” said Bethany Mayer, Ixia'a president and CEO.
After the two companies merge, Keysight expects it will save an estimated $60 million in costs, with $50 million of that coming within two years. Revenue increases of about $50 million are expected by the end of three years and $100 million by five years.
To ensure that the transaction goes through, Keysight entered into voting agreements with Errol Ginsberg, chairman of Ixia, and Katelia Capital Group, Ltd., collective owners of nearly 23 percent of Ixia’s outstanding common stock. These shareholders agreed to vote their shares in support of the transaction.