Keysight and Ixia to Combine to Accelerate Growth and Create a Powerful Innovation Engine

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Cash transaction valued at approximately $1.6 billion
Accelerates growth initiatives and enhances scale to further strengthen market position
Combines world-class talent and IP portfolios to drive innovation and shareholder value
Transaction expected to be immediately accretive
Investor conference call scheduled today at 5:30 a.m. Pacific Time


Keysight Technologies, Inc. (NYSE: KEYS) and Ixia (Nasdaq: XXIA) today announced a definitive agreement for Keysight to acquire Ixia in an all-cash transaction totaling approximately $1.6 billion in consideration, net of cash. The board of directors of both companies have unanimously approved the transaction, which is anticipated to close no later than the end of October 2017 and is subject to customary closing conditions and approvals.

Under the terms of the agreement, Ixia shareholders will receive $19.65 per share in cash. This represents a premium of approximately 45 percent to Ixia’s unaffected closing stock price on Dec. 1, 2016, the last trading day prior to media reports that Ixia was considering strategic alternatives, and a premium of approximately 38 percent to the Ixia’s unaffected 52-week high closing stock price for the period ended Dec. 1, 2016.

“The proposed acquisition of Ixia is in direct alignment with our strategy to transform Keysight for growth and is 100 percent complementary to our business,” said Ron Nersesian, Keysight president and CEO. “The combination creates a powerful innovation engine to fuel growth, expands our software-centric solutions and builds new opportunities through sales and technology leverage. Ixia also brings a world-class level of talent, and together, we will provide leading-edge solutions that address the fastest-growing communications and networking trends including 5G, IoT, visibility, security and application performance.”

The combination of Keysight and Ixia brings together two highly complementary companies to create an innovative force in leading-edge technologies that spans electronic design, device and network validation, and application and security performance. Ixia has a broad IP portfolio that encompasses network communications, visibility, application and security technologies with solutions deeply rooted in software. Additionally, Ixia’s IP includes extensive networking and wireless protocols that will extend Keysight’s position in wireless communications and create a unique combination of Layer 1 through 7 end-to-end solutions that address fast-growing segments of the 5G communications design and test ecosystem.

“We are confident that 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 president and CEO. “Ixia and Keysight share many of the same values including our dedication to innovation of leading-edge technologies, and commitment to operational excellence and financial discipline, which combine to create value for shareholders. We also have industry leading IP portfolios that are complementary, deep technical prowess and amazing teams. We believe that together, Ixia and Keysight have a tremendous opportunity to further strengthen our market leading positions and create unprecedented value for our customers, partners, employees and shareholders. The transaction also provides Ixia shareholders significant cash value at a substantial premium to market.”

Benefits of the Combination


Accelerates Keysight’s Growth by Creating a Powerful Innovation Engine: Enables a unique combination of Layer 1 through 7 end-to-end solutions for assessing performance from the mobile device to the data center and the cloud. Also expands Keysight’s software capabilities by adding engineering talent and software-centric solutions with a high gross-margin profile.
Enhances Scale, Expands SAM and Deepens Market Penetration: Increases Keysight’s SAM by approximately $2.5 billion and establishes a strong position in fast-growing segments. The combined company will serve over 100 countries around the world, and Keysight’s worldwide go-to-market strength and sales channel enables Ixia access to previously untapped non-US NEMs, particularly in Asia.
Combines Global Talent and Advances Innovation Culture: The combination brings together two world-class organizations with innovative culture and common values that will help drive strong collaboration and innovation.
Compelling Financial Profile: The combined company will have an attractive financial profile with enhanced cash flow driven by synergies, scale and improved revenue growth.
Immediately Accretive: Keysight expects the transaction to be immediately accretive to adjusted earnings with annual cost synergies of $60 million, of which $50 million is expected to be achieved within 24 months. Revenue synergies are expected to be in excess of $50 million by year three and $100 million by year five.


Timing and Approvals

The transaction, which is expected to be completed no later than the end of October 2017, is subject to approval by Ixia shareholders, regulatory approvals, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, as well as other customary closing conditions.

Keysight has entered into voting agreements with Errol Ginsberg, Chairman of the Board of Ixia, and Katelia Capital Group, Ltd., collective owners of approximately 23 percent of Ixia’s outstanding common stock, pursuant to which the shareholders have agreed to vote their shares in support of the transaction.

Investor Conference Call Scheduled for Today

Keysight and Ixia will host a joint conference call and online webcast today, Jan. 30 at 5:30 a.m. Pacific Time (8:30 a.m. Eastern Time) to discuss the transaction. This event will be webcast in listen-only mode. Listeners may log on to the call at Keysight’s Investor website at www.investor.keysight.com or on Ixia’s website at investor.ixiacom.com. Interested participants can also access the call by dialing (877) 201-0168 or (647) 788-4901 for international callers. Conference ID 63695238. A slide presentation will be available 15 minutes before the call, on the Keysight website, under Upcoming Events.

Following the live webcast, an archived version will be available for at least 90 days. An audio replay of the call will be available at approximately 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time), through Feb. 6 by dialing (800) 585-8367 or (416) 621-4642 from outside the U.S. and entering pass code 63695238.

Keysight expects to report financial results for its first quarter of fiscal 2017 on Thursday, Feb. 16, 2017. Ixia expects to report financial results for its fourth quarter and year 2016 on Tuesday, Feb. 21, 2017 through a press release and at that time will not hold a conference call.

Advisors

Goldman, Sachs & Co. is serving as financial advisor to Keysight and Cleary Gottlieb Steen & Hamilton LLP is serving as legal counsel. Deutsche Bank is serving as financial advisor to Ixia and Bryan Cave LLP is serving as legal counsel to Ixia.

About Ixia

Ixia (Nasdaq: XXIA) provides testing, visibility, and security solutions, strengthening applications across physical and virtual networks for enterprises, service providers, and network equipment manufacturers. Ixia offers companies trusted environments in which to develop, deploy, and operate. Customers worldwide rely on Ixia to verify their designs, optimize their performance, and ensure protection of their networks to make their applications stronger. Learn more at www.ixiacom.com.
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