NetScout Systems has entered into a definitive agreement to acquire the Communications business of Danaher Corporation, comprising Tektronix Communications, Arbor Networks, and certain parts of Fluke Networks.
Under the terms of the transaction, Danaher shareholders will receive approximately 62.5 million shares of NetScout common stock, which values the transaction at $2.6 billion based on NetScout’s closing price of $41.91 on October 10, 2014.
The transaction will increase NetScout’s scale and broaden its customer base in both the service provider and enterprise markets, while accelerating NetScout’s entry into the Cyber Intelligence market.
On a non-GAAP basis, the combined company is expected to have revenue exceeding $1.2 billion and the transaction is expected be accretive in the first year of combined operation.
The transaction is expected to close in the first half of NetScout’s fiscal year 2016.
"This combination represents another important step, and a major milestone, towards accelerating our ability to compete on a larger and more global scale in the broader IT management and Cyber Intelligence space, to fully implement our NetScout 3.0 strategy, and to maximize our potential in our total addressable market," stated Anil Singhal, co-founder, President and CEO of NetScout.
“NetScout’s high-performance monitoring technology combined with our premier troubleshooting, cyber security and engineering solutions will create the most comprehensive suite of best-in-class solutions in the industry today,” said James A. Lico, Danaher’s EVP. “The combined company will offer even greater breadth and depth across both carrier and enterprise networks, expanding opportunities for innovation and growth while improving our customers’ overall experience with comprehensive software-based solutions.”
Upon completion of the transaction, Lico will join NetScout’s Board of Directors, increasing the total number of directors to eight. NetScout will continue to be led by Singhal as president, CEO and chairman, along with the rest of his executive team.
Singhal concluded, “This business combination will expand NetScout’s global reach and help broaden our presence with customers in both the service provider and enterprise markets. In addition, it will jump-start our planned entry into the Cyber Intelligence market, particularly within the advanced persistent threat area. I am extremely excited about our potential to continue creating even more value for our customers, shareholders and employees. I also look forward to having Jim Lico, an experienced executive with tremendous insight into Danaher’s Communications business, join our Board.”
This transaction will bring together two long-respected leaders in the network and applications performance management and security sectors to create a premier provider of mission-critical solutions that can help customers drive compelling ROI on their IT investments, and mitigate the considerable business and operational risks associated with network and application downtime, service degradation, compliance lapses and security issues.
Danaher’s Communications business generated revenue (unaudited) of approximately $836 million for the year ended December 31, 2013. Danaher’s Communications business, which has over 2,000 employees worldwide, includes:
· Tektronix Communications, based in Plano, Texas, which provides a comprehensive set of assurance, intelligence and test solutions and services support for a range of architectures and applications such as LTE, HSPA, 3G, IMS, mobile broadband, VoIP, video and triple play. Also included are VSS Monitoring and Newfield Wireless.
· Arbor Networks, based in Burlington, Massachusetts, which provides solutions that help secure the world’s largest enterprise and service provider networks from DDoS attacks and advanced threats.
· Fluke Networks, based in Everett, Washington, which delivers network monitoring solutions that speed the deployment and improve the performance of networks and applications. The data cabling tools business and carrier service provider (CSP) tools business within Fluke Networks are not included this transaction.
NetScout, with over 1,000 employees, has a proven track record of successful acquisition integration, highlighted by the retention of key talent, strong collaboration across various technical areas, numerous technical accolades and notable success in driving customer adoption of new and enhanced products that resulted from these acquisitions.
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