Keysight Technologies to buy data technology company Ixia for about $1.6 bn

US electronic test and measurement equipment company Keysight Technologies Inc  yesterday struck a deal to buy data technology company Ixia for about $1.6 billion in cash in a bid to increase its software and security portfolio.

Under the terms of the acquisition, Ixia shareholders will receive $19.65 per share in cash, a premium of around 45 per cent to Ixia's closing price on 1 December 2016, the last trading day prior to media reports that Ixia was considering strategic alternatives.

Keysight expects 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.

Errol Ginsberg, chairman of Ixia, and Katelia Capital Group, who own a combined 23 per cent of Ixia, have agreed to vote their shares for the deal.

Keysight, based in California, said that the merger will 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 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.

''The proposed acquisition of Ixia is in direct alignment with our strategy to transform Keysight for growth and is 100 per cent 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,'' he added.

With annual revenue of $2.91 billion and net profit of $335 million, Keysight was the electronic test and measurement division of first Hewlett-Packard, and later renamed Agilent.

It mainly serves the telecommunications, aerospace, defense, industrial, computer, and semiconductor industries.

Keysight's products include hardware and software for benchtop, modular, and field instruments that include oscilloscopes, multimeters, logic analyzers, signal generators, spectrum analyzers vector network analysers, atomic force microscopes, automated optical inspection, automated X-ray inspection, in-circuit testers, power supplies and handheld tools.