v3.26.1
ACQUISITIONS
 6 Months Ended
Apr. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combination
2.    ACQUISITIONS
Acquisition of Spirent Communications plc
On October 15, 2025, we completed the acquisition of the entire share capital of Spirent Communications plc (“Spirent”) for $1,564 million, using existing cash, which reflects cash consideration of 199 pence (pounds sterling) per Spirent share, and includes $14 million consideration for outstanding awards and unvested options under Spirent’s compensation plans. Total purchase consideration was determined as follows:
(in millions)
Cash consideration, net of cash acquired, outstanding awards, and currency impact$1,415 
Consideration for share-based awards14 
Cash and cash equivalents assumed upon acquisition127 
Currency impact 8 
Total consideration$1,564 
The Spirent acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets and assumed liabilities were recorded at their estimated fair values. We determined the estimated fair values with the assistance of valuations performed by third-party specialists, discounted cash flow analysis, and estimates made by management. The acquisition of Spirent complements our position in communications test and expands our serviceable available market. These factors, among others, contributed to a purchase price in excess of the estimated fair value of Spirent's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.
Goodwill of $667 million and $46 million was assigned to the Communications Solutions Group (“CSG”) and Electronic Industrial Solutions Group (“EISG”) reportable segments, respectively, reflecting the expected benefits and synergies that are likely to be realized from the Spirent acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.
A portion of the overall purchase price was allocated to acquired intangible assets. Amortization expense associated with acquired intangible assets is not deductible for tax purposes. Therefore, a deferred tax liability of $168 million was established primarily for the future amortization of these intangibles and is included in “other long-term liabilities” in the table below.
The following table summarizes the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date:
October 15. 2025
(in millions)
Cash and cash equivalents$127 
Inventory36 
Accounts receivable71 
Assets held for sale433 
Other current assets25 
Property, plant and equipment24 
Operating lease right-of-use assets11 
Other intangible assets528 
Other assets8 
Total assets acquired1,263 
Accounts payable(13)
Employee compensation and benefits(44)
Deferred revenue(44)
Operating lease liabilities(4)
Liabilities held for sale(34)
Other accrued liabilities(69)
Long-term deferred revenue(14)
Long-term operating lease liabilities(9)
Other long-term liabilities(181)
Net assets acquired851 
Goodwill713 
Total consideration$1,564 
Assets and liabilities held for sale primarily included Spirent’s high-speed ethernet, network security, and channel emulation business lines, which were sold to Viavi Solutions Inc. (“Viavi”) in connection with satisfying the regulatory conditions set out as part of the Spirent acquisition. Assets held for sale primarily comprises goodwill of $56 million, other intangible assets of $346 million, consisting primarily of developed technology of $295 million and customer relationships of $50 million, inventory of $25 million, and other assets of $6 million allocated to the divestiture on the relative fair value basis. Developed technology and customer relationships were valued using the relief from royalty and multi-period excess earnings valuation methods, respectively. Liabilities held for sale primarily represents deferred revenue and other accruals. See “Spirent-related divestiture” below for further details.
The fair values of cash and cash equivalents, accounts receivable, other current assets, accounts payable, employee compensation and benefits, and deferred revenue were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values of acquired inventory, property, plant and equipment, and intangible assets were determined with the input from third-party valuation specialists. The fair values of certain other assets and liabilities were determined internally using historical carrying values and estimates made by management. During the six months ended April 30, 2026, the fair value measurements of assets acquired and liabilities assumed as of the acquisition date were refined. The total purchase price allocation adjustments to goodwill for the six months ended April 30, 2026 were approximately $15 million and related primarily to a decrease in the allocation to inventory, property, plant and equipment and other current assets of $4 million, $4 million, and $2 million, respectively, and an increase to employee compensation and benefits of $4 million. In connection with the acquisition and determination of the fair values of acquired assets and assumed liabilities, the company is in the process of obtaining additional information to refine its initial fair value estimates related to income taxes. We expect to finalize this allocation in the third quarter of fiscal year 2026. As additional information becomes available, we may revise the preliminary purchase price allocation during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material.
Valuation of Intangible Assets Acquired
The components of intangible assets acquired in connection with the Spirent acquisition were as follows:
Estimated Fair ValueEstimated useful lifeValuation Method
(in millions)(in years)
Developed technology$370 6Relief from royalty
Customer relationships1458Multi-period excess earnings
Backlog91Multi-period excess earnings
Trademark/Tradename41Relief from royalty
Total intangible assets$528 
As noted above, the intangible assets were valued using various income approach methods and significant assumptions. Significant assumptions related to developed technology included royalty rate, obsolescence rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. Significant assumptions related to customer relationships included customer attrition rate, developed technology royalty rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. Similar significant assumptions were used to value developed technology and customer relationships included in assets held for sale for the Spirent-related divestiture.
Acquisition and integration costs directly related to the Spirent acquisition are primarily included in “research and development” and “selling, general and administrative” in the condensed consolidated statement of operations, and were $30 million and $49 million, respectively, for the three and six months ended April 30, 2026.
Spirent-related divestiture
On October 16, 2025, we sold Spirent’s high-speed ethernet, network security, and channel emulation business lines for $399 million to Viavi. In connection with the sale, we agreed to provide transitional services to the buyer on a short-term basis. We do not have any material continuing involvement with this business.
Acquisition of Synopsys’ Optical Solutions Group
On October 17, 2025, we acquired the Optical Solutions Group business (“OSG”) from Synopsys, Inc. for $581 million, using existing cash, including $3 million consideration for outstanding awards and unvested options under Synopsys’ compensation plans. During the six months ended April 30, 2026, the total purchase consideration was reduced by $1 million to $580 million, reflecting measurement period adjustments to the purchase price allocation.
The OSG acquisition was accounted for in accordance with the authoritative accounting guidance. The acquired assets and assumed liabilities were recorded at their estimated fair values. We determined the estimated fair values with the assistance of valuations performed by third-party specialists, discounted cash flow analysis, and estimates made by management. The acquisition of OSG expands our design engineering software portfolio and computer-aided engineering capabilities, enabling customers to take innovative designs to market faster. These factors, among others, contributed to a purchase price in excess of the estimated fair value of OSG's net identifiable assets acquired (see summary of net assets below), and, as a result, we have recorded goodwill in connection with this transaction.
Goodwill of $67 million and $230 million was assigned to the CSG and EISG reportable segments, respectively, reflecting the expected benefits and synergies that are likely to be realized from the OSG acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.
The following table summarizes the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date:
October 17, 2025
(in millions)
Accounts receivable$15 
Other current assets1 
Property, plant and equipment1 
Operating lease right-of-use assets2 
Other intangible assets276 
Total assets acquired295 
Deferred revenue(9)
Operating lease liabilities(1)
Long-term deferred revenue(1)
Long-term operating lease liabilities(1)
Net assets acquired283 
Goodwill297 
Total consideration$580 
The fair values of accounts receivable, other current assets, and deferred revenue were generally determined using historical carrying values given the short-term nature of these assets and liabilities. The fair values of intangible assets were determined with the input from third-party valuation specialists. The fair values of certain other assets and liabilities were determined internally using historical carrying values and estimates made by management.
Valuation of Intangible Assets Acquired
The components of intangible assets acquired in connection with the OSG acquisition were as follows:
Estimated Fair ValueEstimated useful lifeValuation Method
(in millions)(in years)
Developed technology$183 6Relief from royalty
Customer relationships868Multi-period excess earnings
Backlog12Multi-period excess earnings
Trademark/Tradename11Relief from royalty
Total amortizable intangible assets271
In-process research and development5Relief from royalty
Total intangible assets$276 
As noted above, the intangible assets were valued using various income approach methods and significant assumptions. Significant assumptions related to developed technology included royalty rate, obsolescence rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. Significant assumptions related to customer relationships included customer attrition rate, developed technology royalty rate, revenue growth rate, earnings before interest and taxes, discount rate, and total operating expenses. The in-process research and development was valued by discounting forecasted cash flows directly related to the products expecting to result from the projects, net of returns on contributory assets. A discount rate of 11% was used to value the research and development projects to reflect the additional risks inherent in the acquired projects. The primary in-process projects acquired relate to next generation products which will be released in the near future. Total costs to complete for all OSG in-process research and development were estimated at approximately $2 million as of the close date.
Acquisition and integration costs directly related to the OSG acquisition are included in “research and development” and “selling, general and administrative” in the condensed consolidated statement of operations, and were not material and $5 million, respectively, for the three and six months ended April 30, 2026.
Acquisition of Ansys’ PowerArtist
On October 17, 2025, we acquired PowerArtist from Ansys, Inc. for $26 million, expanding our design engineering software portfolio and computer-aided engineering capabilities, enabling customers to take innovative designs to market faster. We recognized goodwill and other intangible assets of $14 million and $14 million, respectively. During the six months ended April 30, 2026, the fair value measurements of assets acquired and liabilities assumed as of the acquisition date were refined. The total purchase price allocation adjustments to goodwill for the six months ended April 30, 2026 were approximately $12 million and related primarily to a decrease in the allocation to accounts receivable and other intangible assets of $6 million and $3 million, respectively, as well as an increase to deferred revenue of $3 million. Goodwill was assigned to the CSG and EISG reportable segments, reflecting the expected benefits and synergies that are likely to be realized from the acquisition. We do not expect the goodwill recognized or any potential impairment charges in the future to be deductible for income tax purposes.