Keysight must divest assets before finalizing its acquisition of UK-based Spirent Communications. The U.S. Department of Justice (DOJ) announced this requirement in court filings on Monday. The move aims to address antitrust concerns raised by the merger.
Keysight Technologies plans to purchase Spirent, a British company, in a deal originally valued at $1.5 billion. However, the DOJ said Keysight and Spirent together control a large share of key markets. These include high-speed ethernet testing, network security testing, and radio frequency channel emulation.
To resolve these concerns, Keysight must also divest three Spirent businesses. The divested parts include Spirent’s high-speed ethernet testing, network security testing, and radio frequency channel emulation segments. The DOJ warned that without this step, competition would suffer and customers would face harm.
In March, Keysight announced plans to sell the divested businesses to Viavi Solutions, formerly known as JDS Uniphase. The sale could bring in up to $425 million in cash for Keysight. This deal intends to maintain market competition after the merger.
Keysight and Spirent have not immediately commented on the DOJ’s requirement. However, the announcement sets clear conditions for the deal’s approval.
The DOJ highlighted that Keysight and Spirent together hold about 85% of the high-speed ethernet testing market. They also account for over 60% of the network security market and more than 50% of the radio frequency channel emulation market. Such dominance raised concerns about a possible reduction in market competition.
Keysight agreed to buy Spirent in March 2024 for 1.16 billion British pounds, roughly $1.57 billion at current exchange rates. Viavi Solutions had initially planned to acquire parts of Spirent but was outbid by Keysight.
Therefore, Keysight must divest assets to satisfy U.S. regulators and proceed with the acquisition. This move aims to keep the markets competitive and protect customer interests. The deal’s outcome now depends on the successful divestiture and regulatory approval.
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