Spirent to buy Hekimian Laboratories for £1.2bn
Spirent, the world leader in telecoms testing devices, moved in on the network monitoring market yesterday with the proposed £1.2bn acquisition of Hekimian Laboratories, a US company owned by Sweden's Axel Johnson conglomerate. The deal sees family-owned Axel Johnson take an 11.8 per cent stake in Spirent.
Spirent, the world leader in telecoms testing devices, moved in on the network monitoring market yesterday with the proposed £1.2bn acquisition of Hekimian Laboratories, a US company owned by Sweden's Axel Johnson conglomerate. The deal sees family-owned Axel Johnson take an 11.8 per cent stake in Spirent.
Spirent, which entered the FTSE 100 in September, is following other highly rated technology stocks by launching a deeply discounted rights issue to raise £500m to fund the purchase. Axel Johnson will also receive 109 million Spirent shares, worth £692m at yesterday's closing price. The consideration is 8.6 times Hekimian's annualised sales, or 32 times pre-tax profits.
Hekimian writes software that enables remote hardware, or "probes", to monitor activity in telecoms networks. Spirent's core business is in making the probes used for lab-testing telecoms network equipment.
By combining the businesses, the companies expect to gain competitive advantage in the so-called network assurance market by providing solutions rather than individual monitoring tools to Hekimian's customers, such as Verizon, the network services company. "This is about moving into monitoring. We can do more this way than we could through having a customer relationship with each other," said Nicholas Brookes, Spirent's chief executive. "Having hardware and software is the only way to win. We would have clashed with each other eventually." Des Wilson, Hekimian's president and chief executive, said: "We've invested in the software, knowing we could find a partner to provide the probes."
Spirent is offering investors five new shares at 375p for every 24 they own. Spirent shares closed up 33p at 630p. Spirent beat off higher all-cash offers for Hekimian. "All the way through, both managements felt good about the fit of the businesses," Mr Brookes said.
Hekimian, founded by Norris C Hekimian, an engineer, in 1968, and sold to Axel Johnson in 1983, said it had requested that its parent sell it to a telecommunications firm. Axel Johnson is owned by Antonia Johnson, the fourth generation of the company's founding family. Her husband will become a Spirent non-executive.
The companies said they were unaffected by the recent slowdown in the growth seen by some networking infrastructure companies. "Overall growth may be slowing, but a higher proportion of the growth is in the provision of next generation network services. That's our business and it's accelerating," Mr Brookes said.
Spirent changed its name from Bowthorpe in May.
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