Austin-based tech giant National Instruments says it’s open to the possibility of being sold as it weighs its strategic options.
The company, which rebranded to NI in recent years, said Friday that it has retained advisors to review a range of options, including soliciting interest from potential acquirers and other transaction partners.
The publicly traded company said it has already been approached by some potential buyers. NI also said there was no deadline or definitive timeline set for the strategic review, and that it might not result in an acquisition.
NI, which was founded in 1976, is one of the largest tech employers in Central Texas, with roughly 2,000 local workers. NI has long specialized in testing and measuring hardware and software systems used in a number of industries. In recent years, the company has also been looking to expand its business into other sectors, including aerospace, defense and government, electric and autonomous vehicles and 5G connectivity.
As of Friday, the company’s market cap — the total value of NI’s outstanding shares of common stock — was $6.1 billion.
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The company also said it would adopt a shareholder rights plan, which would expire on January 12, 2024. This type of plan, also known as a poison pill, is used by companies to defend against a hostile takeover by keeping a potential acquirer or activist investor from acquiring a large stake in the company. NI said the plan would “help ensure all interested parties have an opportunity to participate fairly” in the review and give shareholders time to make informed decisions.
Michael McGrath, chairman of NI’s board of directors, said the company has been undergoing a transformation in the past five years, focusing on complete technology solutions in high-growth markets.
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“In 2023, we are taking the next step in this transformation, with significant improvements in operating efficiencies,” McGrath said in a written statement. “We expect significant shareholder benefits from these initiatives in 2023 and beyond. Notwithstanding our confidence in NI’s prospects, we believe initiating a strategic review to explore options to maximize value for our shareholders is the right path forward at this time.”
National Instruments had revenue of $1.47 billion in 2021, a record for the company. The company reported $428 million in revenue in the third quarter of 2022, an increase of 16% from the same quarter the previous year. Through three quarters in 2022, NI had $1.2 billion in revenue. The company has not yet reported its earnings from the fourth quarter.
NI’s stock rose as much as 19% Friday after it announced the possibility of a sale. NI’s share closed Friday at $46.97, up $6.80, or 17%, for the day.
Eric Starkloff, who became National Instruments’ CEO in February 2020, said the company’s focus on software and related services has led to growth and better profitability.
“These changes have enabled a deliberate focus on high-growth sub-segments, including electric and autonomous vehicles, wireless communications and new space technology,” Starkloff said.
NI has made a number of acquisitions in recent years to grow in markets including its automotive business. In 2020, the company also closed its largest-ever acquisition, purchasing Israel-based data analytics company OptimalPlus in a deal valued at $365 million.
In November 2020, NI cut its global staff by about 9% citing the pandemic’s impact on its business. At the time, NI had about 7,300 employees worldwide, with about 2,200 of those in Austin. It did not disclose the number of Austin-area employees affected and did not give a specific number of the total job cuts, but a 9% reduction in its global workforce would have been about 650 total positions.