(Alliance News) - Spirent Communications PLC on Tuesday agreed a GBP1.01 billion takeover by Viavi Solutions Inc.
The Crawley, England-based automated test and assurance solutions provider said the all-cash offer was for 175 pence per share, comprising 172.5p cash and a 2.5p special dividend. It values Spirent's entire equity at GBP1.01 billion.
Shares in Spirent were up 59% to 172.10 pence each in London on Tuesday morning, giving a GBP994.8 million market capitalisation.
Viavi Solutions is a Chandler, Arizona-based manufacturer of testing and monitoring equipment for networks. It is traded on Nasdaq in New York and has a market value of USD2.17 billion.
Spirent pointed out the bid terms represent a 61% premium to Monday's closing share price of 108.4p.
The board of Spirent declared the terms "fair and reasonable" and gave its unanimous backing to the proposal.
Spirent Chief Executive Eric Updyke said: "The combination of the Viavi group and the Spirent group creates a stronger business that will be better able to compete in what remains a challenging market environment and we are confident in the opportunities this will bring for many of our stakeholders."
Chair Bill Thomas said the offer "recognises the underlying value of Spirent," and is an "attractive outcome for our investors", representing a "highly complementary combination".
Viavi said it has been following Spirent for a number of years and has been impressed with the strategy employed by the board and its management team.
Separately, Spirent released 2023 results. Pretax profit plummeted 80% to USD22.9 million from USD114.6 million, on revenue 22% lower at USD474.3 million, down from USD607.5 million.
Basic earnings per share collapsed 74% to 4.30 US cents from 16.46 cents.
No final dividend was proposed, compared to 4.94 cents the year before. The final dividend for 2023 will be replaced by the special dividend declared as part of the Viavi takeover offer.
Updyke said that during 2023 the market became "increasingly challenging," as elevated interest rates and inflationary pressures "impacted customers, especially those in the telecommunications sector".
He explained these customers responded by taking significant action, particularly in the second half of 2023, to cut costs and by reducing their capital expenditure to preserve cash.
Updyke said the current challenges for the telecoms industry "will continue and it is difficult to predict how long they will last".
By Jeremy Cutler, Alliance News reporter
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"To help navigate these more challenging conditions, we accelerated our focus on non-telco end markets, we undertook cost saving measures which will continue to deliver savings in 2024 whilst continuing to make important R&D investments to maintain our technology leadership.
Spirent (SPT)