Keysight and Spirent Extend Acquisition Deadline; China Mandates Divestitures

Keysight and Spirent Acquisition Deadline Extended, China Mandates Divestitures

U.S.-based Keysight Technologies, Inc. (NYSE:KEYS) and UK-based Spirent Communications plc (LSE:SPT) announced an extension to the deadline for their pending acquisition, pushing it to October 27, 2025. This adjustment comes as both companies navigate the final stages of regulatory approval from China's State Administration for Market Regulation (SAMR), which has conditionally cleared the deal subject to divestitures.

Transaction Details and Regulatory Scrutiny

The UK Court formally approved the deadline extension on September 16, 2025, shifting it from the prior September 29, 2025. This allows additional time for the conclusion of the review process by SAMR, a critical remaining condition for the acquisition to proceed. The original all-cash acquisition, valued at approximately £1.16 billion ($1.58 billion), was first announced on March 28, 2024, and is structured as a Court-sanctioned scheme of arrangement.

Despite the deal not meeting China's mandatory filing thresholds, Keysight and Spirent voluntarily submitted it for review in November 2024, underscoring the strategic importance of Chinese market clearance. SAMR's decision, issued recently, stipulates that the merger would significantly alter market dynamics in two crucial technology-testing areas: high-speed Ethernet testing and network-security testing.

Strategic Rationale and Competitive Landscape

Keysight, a specialist in electronic design, test, and measurement solutions, aims to integrate Spirent's operations to bolster its market position, particularly in the communications sector. Spirent, a leader in telecom testing, brings capabilities in 800G solutions and AI infrastructure testing.

SAMR’s regulatory review highlighted specific concerns regarding market concentration.

"With the rise of AI and high-performance computing technologies... downstream customers' demand for higher-rate Ethernet testing products will increase substantially in the coming years," SAMR stated, noting that customer dependence on the combined entity's products "may be further strengthened" as demand grows for 800-gigabit and 1.6-terabit Ethernet testing capabilities.

In the global high-speed Ethernet testing market, Keysight and Spirent collectively held the first and second positions in 2023, with a combined market share estimated between 50-55 percent. In China, their combined share reached 40-45 percent. For the 400-gigabit and faster Ethernet testing segment, their combined global market share escalated to 70-75 percent.

Implications for the Technology Testing Market

The conditional approval from SAMR, requiring divestitures, directly addresses concerns about potential monopolistic effects, particularly given the escalating demand for advanced testing solutions. This regulatory action underscores the increasing scrutiny on technology mergers, especially those impacting critical infrastructure for artificial intelligence. The required divestitures are intended to ensure continued competition in these rapidly evolving and strategically vital technology sectors.

Financial and Operational Outlook

While the extension introduces a period of continued uncertainty, the market had already factored in an approximately 85% deal completion probability with a 3% spread between Spirent's current share price and the offer terms as of May 2025. On the day of the extension announcement, Spirent Communications (LSE:SPT) recorded a 0.00% change, while Keysight Technologies (NYSE:KEYS) saw a 0.52% increase, suggesting a relatively muted immediate market reaction, likely due to the expectation of approval.

A prolonged delay, however, could lead to increased transaction costs, financing uncertainties, and opportunity costs for Keysight. For Spirent, extended uncertainty could impact employee morale and retention, though the company has reportedly maintained R&D investment, signaling a preparedness for a standalone future if necessary. Spirent reported stable cash reserves of $149 million in Q1 2025, indicating a sound financial position.

Path Forward

The next key milestone is the Scheme Court Hearing, scheduled for October 14, 2025. If sanctioned, the acquisition is anticipated to become effective on October 15, 2025, with shareholders expected to receive cash consideration by October 29, 2025. The successful implementation will depend on the satisfactory completion of the mandated divestitures and the finalization of the regulatory process. This outcome will allow Keysight to integrate Spirent's capabilities, solidifying its market position in the burgeoning technology testing landscape, particularly relevant for the advanced needs of AI and high-performance computing.