Tektronix to buy Inet Technologies

Oregon-based test company Tektronix announced its will acquire Inet Technologies for approximately $325 million, mostly in stock. Already approved by both companies’ stockholders, the deal is expected to close at the end of September.

With the acquisition, Tektronix will expand beyond mobile protocol test business into broader test and monitoring solutions that address both the equipment provider and service provide spaces. The company will pay approximately $250 million in stock and $75 million in cash, despite having a strong cash reserve.

Tektronix will pick up a profitable company—for 14 years running since the year after its inception in 1989. Inet has approximately 500 employees and had 2003 worldwide sales of $104 million. Its customers include AT&T, BT, Deutsche Telekom, Global Crossing, MCI, Sprint, Swisscom, Telstra and Vodafone.

“Tektronix brings stronger diagnostic capabilities and customer relationships and Inet brings leadership in monitoring and network management and strong network operator relationships,” said Rick Wills, chairman and CEO at Tektronix.

He added that while Tektronix’ protocol [test] business is very strong, the network monitoring piece is a much smaller unit lacking critical mass. Inet provides the missing mass with its Unified assurance solution and other diagnostic products for GPRS, UMTS and VoIP technologies.

“Together we will become the most complete, end-to-end provider of network and protocol analysis solutions,” Wills said.

Inet will become part of Tektronix’ Communications and Video business. By joining Tektronix’ protocol and equipment test business with Inet’s network monitoring and management capabilities, Tektronix puts Agilent Technologies in its sights.

“Together against Agilent we will be very strong,” said Elie Akilian, president and CEO of Inet. It was not immediately clear what role Akilian will take in the merged company.

Akilian did say stockholders should be pleased with the resulting combination. As for the company, he said, “this provides Inet the scale we need to capitalize on the significant growth opportunity in today’s mobile data and voice-over-IP markets.”

Last week, Tektronix reported fourth quarter net sales of $257.8 million and net earnings of $26.5 million. The quarter ended on May 29. Net earnings were up from $4.3 million in the fourth quarter on $202.3 in net sales. For fiscal year 2004, the company reported net sales of $920.6 million, 16% growth over sales of $791.0 million in fiscal year 2003.