Carlyle to make 7x on Eggplant’s sale to Keysight

Carlyle Group is set to make 7x its money on sale of Eggplant Software to Keysight Technologies.

Carlyle Group is set to make 7x its money on sale of Eggplant Software to Keysight Technologies, sources familiar with the deal told PE Hub.

Carlyle’s sale of Eggplant, a UK provider of automated and AI-driven software testing tools, valued the company at $330 million, the firm announced June 25.

PE Hub first reported that Keysight was set to buy Eggplant on May 27.

Keysight Technologies, a publicly traded company on the New York Stock Exchange with a market cap of $18.5 billion, manufactures electronic test and measurement equipment and software.

The deal brings together two complementary companies to create an innovative force in the intelligent software test automation market, the companies said in the press release.

While both companies operate in the automation testing market, Eggplant is likely to advance Keysight’s capabilities with a newer next-generation software technology, sources told PE Hub in May.

Eggplant had produced $38 million in 2019 revenue, the company said. The deal value translates into nearly 8.68x Eggplant’s 2019 revenue.

For Carlyle Group, Eggplant represents a significant return on the firm’s 2016 investment.

Carlyle invested in the company in January 2016 out of Carlyle Europe Technology Partners III, which closed on its hard-cap of €656.5 million two years earlier. The fund invests in TMT and other emerging technology companies across Europe.

Despite the covid-19 pandemic and economic slowdown that forced many firms to postpone exit activity, the process for Eggplant went forward and attracted a number of prominent European and US-based PE firms as well as strategics, sources said in May.

Keysight, however, was less fortunate, as the covid-19 pandemic negatively affected the supply chain and forced shutdown of some production facilities, impacting Keysight’s second-quarter results.

Keysight’s non-GAAP revenues declined 18 percent year-over-year to $895 million. Keysight’s orders fell 3 percent on a year-over-year basis to $1.089 billion during the reported quarter.

Keysight’s stock was at $99.24 per share in late trading June 25, down nearly 2 percent since the previous day close.

Carlyle Group declined to comment for the story.

Action Item: View PE Hub’s story on Keysight acquiring Eggplant.

Correction: The story was corrected to reflect that the deal value translates into 8.68x Eggplant’s 2019 revenue.