Keysight Technologies, Inc. (NYSE: KEYS) has entered into an agreement with VIAVI Solutions, Inc. (NASDAQ: VIAV) for the sale of Spirent Communications’ high-speed Ethernet and network security business lines. The purchase is expected to be completed by the second quarter of 2025, subject to regulatory approvals.
A Calculated Divestment for Regulatory Approval
The divestment comes as part of Keysight’s proactive approach to securing regulatory approvals for its acquisition of Spirent Communications. Regulatory authorities, particularly the UK’s Competition and Markets Authority (CMA), are scrutinizing this deal. The companies have already secured national security clearances from the UK, Germany and France. The CMA will issue a decision to either approve the deal or refer it to a second-phase review by March 13. The regulator has not raised any formal concerns, but by offloading these specific business segments to VIAVI, Keysight aims to alleviate potential antitrust concerns and expedite the acquisition process.
Strengthening Market Positions for Both Companies
For Keysight, this divestment allows a sharper focus on its core competencies in electronic design, testing, and measurement solutions. By streamlining operations, the company can integrate Spirent’s broader capabilities more effectively while avoiding market overlaps in high-speed Ethernet and network security testing.
On the other hand, VIAVI , who tried to buy Spirent before Keysight, stands to gain from the acquisition of Spirent’s high-speed Ethernet and network security business. This transaction enhances VIAVI’s Ethernet testing platform and bolsters its footprint in key sectors such as enterprise networking, service providers, data centers, and government cybersecurity. Additionally, the acquisition brings a wealth of software, hardware, and protocol domain expertise, positioning VIAVI as a stronger player in the evolving AI, security, and digital infrastructure markets.
Key Regulatory Hurdles
The companies still need to secure two regulatory approvals to close the deal. First, the CMA’s approval. This approval could come as early as March 13, the statutory deadline for the CMA to issue a decision. If the regulator needs additional time or it if considers this divestiture is not enough to alleviate any possible antitrust concerns, it would refer the merger to a second-phase review, pushing the deadline around 6 months.
Second, the companies filed the merger before the State Administration for Market Regulation of the People’s Republic of China (SAMR) in November 25, 2024, but they are still waiting for approval.
