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Spirent Communications PLC (LON:SPT) has reported a loss for the first half of 2024, attributing the downturn to customer hesitancy caused by its proposed acquisition by Keysight Technologies. The Crawley-based firm, which specializes in testing and assurance services, saw its profitability affected as contracts were delayed due to the ongoing takeover discussions.
Financial Performance Decline
The company has announced a pretax loss of $7.5 million for the six months ending June 30, a decline from a $4.8 million profit reported in the same period last year. Revenue also decreased by 12%, falling to $197.3 million from $223.9 million in the previous year. Order intake during this period was $188.8 million, down 21% from $239.4 million, and the order book decreased by 6.3% to $284.2 million.
Takeover Details and Market Reaction
In March, Spirent agreed to a £1.16 billion takeover offer from Keysight Technologies, a Santa Rosa-based electronics test and measurement equipment manufacturer. The proposed offer is valued at 201.5p per share, including 199.0p in cash and a 2.5p special dividend. Despite the takeover, Spirent’s shares remained relatively stable at 171.00 pence as of Tuesday morning in London.
Customer Hesitancy and Market Conditions
The delay in contract placements has been attributed to customer caution while they assess the implications of the takeover. Spirent’s CEO, Eric Updyke, noted that although there were no order cancellations, the delays have impacted the company's performance. The company expects the challenging market conditions to persist in the second half of the year, which could affect near-term performance.
Regulatory Approval and Future Outlook
Spirent Communications and Keysight Technologies are working with regulatory authorities to finalize the acquisition. The takeover is anticipated to be completed in the first half of financial 2025, between November and April. The ongoing regulatory process and market uncertainties surrounding the deal may continue to influence Spirent’s business performance in the interim.
