UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): January 30, 2017

 

 

KEYSIGHT TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

         
Delaware   001-36334   46-4254555

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

   
1400 Fountaingrove Parkway    
Santa Rosa, CA   95403
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (800) 829-4444

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 
 

 

ITEM 8.01 Other Events.

On January 30, 2017, Keysight Technologies, Inc., a Delaware corporation (the “Company”), and Ixia, a California corporation (“Ixia”), issued a joint press release announcing the execution of an Agreement and Plan of Merger, dated as of January 30, 2017, by and between Ixia and the Company (the “Merger Agreement”). A copy of the joint press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein. The information required by Item 1.01, including a copy of the Merger Agreement, will be filed in a separate Current Report on Form 8-K.

On January 30, 2017, the Company also provided supplemental information regarding the proposed transaction in connection with a presentation to investors. A copy of the investor presentation is attached hereto as Exhibit 99.2 and is incorporated by reference herein.

Forward-Looking Statements

This Current Report on Form 8-K and the exhibits incorporated by reference herein contain forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward-looking statements contained herein and therein include, but are not limited to, information regarding the ability of the Company and Ixia to complete the transactions contemplated by the Merger Agreement, including the satisfaction of the conditions to the transactions set forth in the Merger Agreement, and the Company’s and the combined group’s estimated or anticipated future results of operations. These forward-looking statements involve risks and uncertainties that could cause the Company’s and the combined group’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, unforeseen changes in the strength of the Company’s and Ixia’s customers’ businesses; unforeseen changes in the demand for current and new products, technologies, and services; customer purchasing decisions and timing; unforeseen changes in future revenues, earnings and profitability of the Company or Ixia; the risk that the Company is not able to realize the savings or benefits expected from integration and restructuring activities relating to the proposed acquisition of Ixia; the risk that the required regulatory approvals for the proposed acquisition of Ixia are not obtained, are delayed or are subject to conditions that are not anticipated; and those risks and uncertainties discussed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 19, 2016 and Ixia’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016.

ITEM 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

     

Exhibit
Number

 

Description

99.1   Joint Press Release dated January 30, 2017.
99.2   Investor Presentation dated January 30, 2017.

 

1

 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

     
KEYSIGHT TECHNOLOGIES, INC.
   
By:   /s/ Jeffrey K. Li
Name:   Jeffrey K. Li
Title:  

Vice President, Assistant General Counsel

and Assistant Secretary


Date: January 30, 2017

 

2

EXHIBIT INDEX

 

     

Exhibit
Number

 

Description

99.1   Joint Press Release dated January 30, 2017.
99.2   Investor Presentation dated January 30, 2017.
 
 

 

 

   

 

 

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

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

 

SANTA ROSA and CALABASAS, Calif. January 30, 2017 – 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% to Ixia’s unaffected closing stock price on December 1, 2016, the last trading day prior to media reports that Ixia was considering strategic alternatives, and a premium of approximately 38% to the Ixia’s unaffected 52-week high closing stock price for the period ended December 1, 2016.

 

“The proposed acquisition of Ixia is in direct alignment with our strategy to transform Keysight for growth and is 100% 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% 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 http://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.

 

Forward Looking Statements

This news release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. These forward-looking statements involve risks and uncertainties that could significantly affect the expected results and are based on certain key assumptions. Due to such uncertainties and risks, no assurances can be given that such expectations will prove to have been correct, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. The forward-looking statements contained herein include, but are not limited to, the manner in which the parties plan to effect the transaction; the expected benefits and costs of the transaction; management plans relating to the transaction; the expected timing of the completion of the transaction; the parties’ ability to complete the transaction considering the various closing conditions, including conditions related to regulatory and Ixia shareholder approvals; the plans, strategies and objectives of management for future operations; product development, product extensions, product integration, complementary product offerings and growth opportunities in certain business areas; the potential future financial impact of the transaction; and any assumptions underlying any of the foregoing. Actual results may differ materially from those referred to in the forward-looking statements due to a number of important factors, including but not limited to the possibility that expected benefits of the transaction may not materialize as expected; that the transaction may not be timely completed, if at all; that Keysight may not be able to successfully integrate the solutions and employees of Keysight and Ixia or ensure the continued performance or growth of Ixia’s products or solutions.

 

In addition, other risks that Keysight faces include those detailed in Keysight’s filings with the Securities and Exchange Commission, including Keysight’s annual report on Form 10-K for the year ended October 31, 2016. Other risks that Ixia faces include those detailed in Ixia’s filings with the Securities and Exchange Commission, including Ixia’s annual report on Form 10-K for the year ended December 31, 2015.

 

 
 

   

 

Forward-looking statements are based on the beliefs and assumptions of Keysight’s and Ixia’s management and on currently available information. Keysight and Ixia undertake no responsibility to publicly update or revise any forward-looking statement.

 

Important Additional Information and Where to Find It

Ixia plans to file with the Securities and Exchange Commission and to mail to its shareholders a proxy statement in connection with the proposed transaction. The proxy statement will contain important information about Ixia, the proposed transaction, and related matters. Ixia also plans to file with the Securities and Exchange Commission other documents regarding the proposed transaction. BEFORE MAKING ANY VOTING DECISION, IXIA’S SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT MATERIALS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE. Ixia’s shareholders will be able to obtain free copies of the proxy statement and other documents filed with the Securities and Exchange Commission by Ixia through the web site maintained by the Securities and Exchange Commission at www.sec.gov or through the investor relations section of Ixia’s website at http://investor.ixiacom.com.

 

Participants in the Solicitation

This document does not constitute a solicitation of proxy, an offer to purchase or a solicitation of an offer to sell any securities. Ixia and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Ixia’s shareholders with respect to the proposed transactions. Information regarding Ixia’s directors and executive officers is contained in Amendment No. 1 to Ixia’s annual report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission on May 5, 2016 and in its proxy statement for the Ixia’s 2016 annual meeting of shareholders filed with the Securities and Exchange Commission on May 3, 2016. Additional information regarding the interests of Ixia’s directors and executive officers in the transaction will be included in the proxy statement for the special meeting of Ixia’s shareholders to be held to approve the transactions contemplated by the merger agreement and in other relevant documents regarding proposed transaction, when filed with the Securities and Exchange Commission.

 

About Keysight Technologies

Keysight Technologies (NYSE: KEYS) helps customers bring breakthrough electronic products and systems to market faster and at a lower cost. Keysight’s solutions go where the electronic signal goes, from design simulation, to prototype validation, to manufacturing test, to optimization in the network. Customers span the worldwide communications ecosystem, internet infrastructure, aerospace & defense, automotive, semiconductor and general electronics end markets. Keysight generated revenues of $2.9B in fiscal year 2016. More information is available at www.keysight.com.

 

Additional information about Keysight Technologies is available in the newsroom at www.keysight.com/go/news.

 

 
 

   

 

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.

 

Ixia and the Ixia logo are trademarks or registered trademarks of Ixia in the U.S. and other countries.

 


Keysight Contact:

Jason Kary

Tel: 707 577 6916

jason.kary@keysight.com

 

Ixia Investor Relations Contact:

The Blueshirt Group

Maria Riley

Tel: 415-217-7722

maria@blueshirtgroup.com

 

Ixia Media Contact:

Andy Brimmer / Kelly Sullivan / Nick Lamplough

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449

Accelerating Keysight’s Growth Keysight Technologies to Acquire Ixia | 30 January 2017

 
 

Page 2 January 2017 Safe Harbor This presentation contains forward - looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The forward - looking statements contained herein include, but are not limited to, information regarding the ability of Keysight and Ixia to complete the transactions contemplated by the merger agreement, including the satisfaction of the conditions to the transactions set forth in the merger agreement, and Keysight’s and the combined group’s estimated or anticipated future results of operations. These forward - looking statements involve risks and uncertainties that could cause Keysight’s and the combined group’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, unforeseen changes in the strength of Keysight’s and Ixia’s customers’ businesses; unforeseen changes in the demand for current and new products, technologies, and services; customer purchasing decisions and timing; unforeseen changes in future revenues, earnings and profitability of Keysight or Ixia; the risk that Keysight is not able to realize the savings or benefits expected from integration and restructuring activities relating to the proposed acquisition of Ixia; the risk that the required regulatory approvals for the proposed acquisition of Ixia are not obtained, are delayed or are subject to conditions that are not anticipated; and those risks and uncertainties discussed in Keysight’s Annual Report on Form 10 - K filed with the Securities and Exchange Commission on December 19, 2016 and Ixia’s Annual Report on Form 10 - K filed with the Securities and Exchange Commission on February 29, 2016.

 
 

Page 3 January 2017 Keysight Technologies and Ixia Leadership Team Introductions Ron Nersesian President and Chief Executive Officer, Keysight Technologies Neil Dougherty Senior Vice President, Chief Financial Officer, Keysight Technologies Jason Kary Vice President, Treasurer & Investor Relations, Keysight Technologies Bethany Mayer President and Chief Executive Officer, Ixia Mark Pierpoint Vice President, Internet Infrastructure Solutions, Keysight Technologies

 
 

Page 4 January 2017 Keysight Acquisition of Ixia (1) Approximate value calculated on a fully diluted basis. (2) Based on Keysight management projections. Calculated on a non - GAAP basis. Excludes the impact of one - time integration and acquisition related costs. A Strong Combination Metrics & Timeline Attractive Financial Profile • Opportunity to accelerate growth and expand market: 100% complementary combination; adds $2.5B in Served Addressable Market (SAM) • Enables breakthrough solutions in communications design and test • Aligns with Keysight’s growth initiatives: Grows software - driven revenues; increases number of R&D software engineers by approximately 65% • Enhances cash flow: Driven by cost synergies, improved revenue growth, and higher margin mix • All cash purchase price of $19.65 per share / $1.6 billion enterprise value¹ • Funding mix determined between signing and close – Commitment to maintaining investment grade ratios – Expect to de - lever to ~2x leverage within 24 months – Funding may include cash on hand, debt and, as required, equity • Transaction expected to close no later than October 2017, subject to regulatory review and customary closing conditions • ROIC materially above cost of capital, mid - teens accretion to adjusted EPS within 24 months • Expected annual cost synergies of $60M, with $50M within 24 months of completion of acquisition 2 • Revenue synergies in excess of $50M by year 3 and $100M by year 5 • Material revenue synergies through cross - sale opportunities and sales channel enhancements

 
 

Page 5 January 2017 Industry Pioneer In Network Test; first to market for 10G, 25G, 40G, 50G, 100G, and 400G Technology Leader In Network Visibility and #1 in visibility access; h ighest performance, no dropped packets, best ease of use Ixia: A Network Test and Visibility Solutions Leader Market - Leading Contributions and Strong Financial Profile Ixia Adds Value to Customers Across the Network Lifecycle 2 Network Test 73% Network Visibility 27% 15 of the Top 15 NEMS 47 of the Top 50 Carriers 77 of the Fortune 100 Service Providers NEMS Network Equipment Manufacturers 43% Service Providers 23% Enterprise 34% Solutions: Driving the Opportunity in Visibility 1 Customer s: Growing the Enterprise Mix 1 Enterprise (1) YTD through 9/30/2016. (2) Source: Ixia investor presentation. Broad IP 400+ US and foreign patents issued or pending; 65% are software - related World Class Talent 1,823 employees; nearly 45% in R&D; 90% of R&D are software engineers Strong Profile Double - digit 4 - year revenue CAGR; 79% gross margin; ~35% recurring revenue

 
 

Page 6 January 2017 Accelerates Keysight’s strategy to move up the stack with software - centric solutions Acquisition of Ixia From hardware to software Physical Layer 1 Transport Layers 2, 3, 4 Application and Control Layers 5, 6, 7 Mobile Network Test Network and Application Testing, Visibility, and Security Keysight Classic Anite Ixia Mobile Device Test Electrical, RF & Optical Test Base Station Emulation Channel Emulation Drive Test Customer Experience Management Stack Layers

 
 

Page 7 January 2017 Ixia is Strategic and 100% Complementary ― Opportunity to accelerate growth and expand market • Network Visibility market experiencing double - digit annual growth driven by enhanced security needs and software - defined network trends • Opportunity to extend Ixia’s leading Network Test position by leveraging Keysight’s worldwide sales channel, and extend Keysight’s enterprise and carrier position by leveraging Ixia’s focused channel • Adds $2.5B to Keysight’s Served Addressable Market (SAM) ― Combination enables breakthrough solutions in communications design and test • Combines Keysight’s market - leading design and test solutions and customer reach with Ixia’s market leadership in Network Test and strong #2 position in Network Visibility • Enables a unique combination of Layer 1 to 7 end - to - end solutions for fast - growing segments of the communications ecosystem such as 5G, Wi - Fi and Internet of Things (IoT) ― Aligns with Keysight’s growth initiatives and enables additional software - centric solutions • Strong skills in cloud - based development and unique experience in delivering test and visibility solutions for cloud - based environments • Ixia solutions have high software content; recently introduced AWS cloud - based visibility solution • Ixia brings an innovative team with approximately 700 software engineers Combined company will have enhanced cash flow driven by cost synergies, improved revenue growth, and higher margin mix Source: Keysight estimates per F&S Global Wireless Study (Jan 2015), Analysis Mason Service Assurance (2015), Gartner Research (Jan 2016), Prime Data CTIS 2014, Test Mobile Market Assessment (Mar 2016).

 
 

Page 8 January 2017 Combination Creates Growth Opportunities Through Technology and Sales Leverage Keysight’s worldwide sales strength and physical layer leadership combined with Ixia’s protocol layer leadership enables new solutions and deeper market penetration Technology x Keysight’s wireless expertise combined with Ixia’s protocol stack and IP traffic generation enables new end - to - end solutions for assessing performance from the mobile device to the data center and the cloud Global Sales Channel x Keysight’s worldwide sales channel enables Ixia access to previously untapped non - US NEMs, particularly in Asia New Customers x Keysight’s longstanding engagement with US aerospace and defense prime contractors opens up new opportunities for Ixia’s network test solutions

 
 

Page 9 January 2017 Aligned With Keysight’s Disciplined and Well - Defined Criteria for Acquisitions • Aligns with strategic growth priorities • Delivers higher gross margin R&D or software solutions • Expands Served Addressable Market (SAM) • Focuses on f aster growing market segments or adds key technology • ROIC materially above cost of capital • Immediately accretive to Keysight earnings per share • Valuation aligns with appropriate market multiples Strategic Alignment Value Creation Growth

 
 

Page 10 January 2017 Financial Impact Transaction Summary (1) Based on Keysight management projections. Calculated on a non - GAAP basis. Excludes the impact of one - time integration and acquisition related costs. Investor Returns Significant cost synergies through infrastructure rationalization and supply chain efficiencies, as well as improved revenue growth via SAM expansion in higher - growth markets • Combined company annual cost synergies of $60M; $50M achieved within 24 months • Revenue synergies in excess of $50M by year 3 and $100M by year 5 – Driven by cross - sale, channel enhancement, and leverage of relationships with NEMs and Carriers – Additive to standalone growth of both Keysight and Ixia Focus on growth and operating model discipline drive sustainable cash flow and superior financial performance throughout the business cycle • Strong free cash flow allows rapid deleveraging, while maintaining a conservative financial policy that supports commitment to investment grade financial ratios – Suspension of share repurchase program enables Keysight to de - lever to ~2x leverage within 24 months • Revenue growth: Increases Keysight’s growth profile through exposure to higher growth markets and revenue synergy opportunities • EPS growth: Expect mid - teens accretion to adjusted EPS within 24 months of completion 1

 
 

Page 11 January 2017 Industry pioneer and recognized leader in network test; a leader in network visibility solutions Deep expertise in IP network assessment, excellent customer relationships, software - centric business & team A Powerful Innovation Engine to Drive Growth A Combination of Complementary Strengths A global leader in communications with the ability to deliver end - to - end solutions across the network and up and down the stack Scale and operational excellence to drive both revenue and profit growth A software - centric team to enable further transformation and value creation A global leader in measurement instrumentation and software for physical layer testing Deep expertise in wireless technology, strong worldwide sales presence, proven operational discipline