Network testing technology developer Ixia on Monday continued to expand its offerings via M&A with a $160 million cash agreement to acquire BreakingPoint Systems Inc., whose technology tests the vulnerability of networks to security threats.

Calabasas, Calif.-based Ixia's CEO, Vic Alston, said his company had been trying to build security offerings on its own after receiving requests from its enterprise and service and cloud network provider customers. But the speed of market developments led Ixia to BreakingPoint and its largest acquisition to date, he said.

"Security requires a certain pedigree and background that we were not able to develop on our own," Alston said in an interview. "It would have taken us a long time to develop, and we felt the market opportunity is now."

The transaction follows Ixia's June 4 acquisition of Anue Systems Inc. That deal, which carried a $155 million price tag, extends Ixia's reach from testing systems used before a network is deployed to monitoring and testing live networks.

Ixia shares dropped 1%, to $11.88, in early afternoon trading Monday. 

Privately held BreakingPoint was founded and seed-funded in Austin, Texas, in 2005 by several executives who had sold a previous network security company, TippingPoint Technologies, to 3Com Inc. for $430 million. Austin Ventures invested early on; Genesis Inventions LP, a limited partnership formed by BreakingPoint chairman and Austin-based investor John McHale and BreakingPoint director Paul Zito, holds a majority stake in the company. 

BreakingPoint co-founder and chief technology officer Dennis Cox said the deal with Ixia came about after BreakingPoint's board hired AGC Partners to consider a sale. 

"Our company was at the 'crossing the chasm' point where we would have to hire a lot of people, and that was a bit scary," Cox said in an interview. "We had to do something big, so we felt this was the right spot to find someone to help us."

BreakingPoint offers a library of 34,000 examples of security threats that enable it to test networks with the kinds of malware and other attacks that they could be subjected to in the real world.

The company's revenue increased 40%, to $33.5 million, in 2011, Ixia said. Its revenue is set to increase by another 40% this year, and acquiring BreakingPoint is expected to add to Ixia's non-GAAP earnings in the first full quarter after the deal closes.

Coming on the heels of the Anue closing, the deal hands Ixia a tall integration order to fill. Alston said that despite the integration risk, the timing was right to acquire BreakingPoint.

"I would have liked to have a little more time between acquisitions, but that can't always happen," Alston acknowledged. "The market and the company you are buying also dictate the timing."

Alston said the integration will be eased by the fact that Anue will primarily be operated as a standalone unit. The same will hold for BreakingPoint, at least for a while, he added.

"BreakingPoint doesn't really overlap with our existing customers, so we can run it on a standalone basis," he said. "Over the longer term we'll start to integrate it more."

Ixia turned to the same teams of advisers as it did on the Anue deal. For financial advice, the company hired Stifel Nicolaus Weisel's Cole Bader, David Chanley and Chen Xue. Outside counsel on the deal was provided by Bryan Cave LLP's Katherine Ashton and Stephanie Hosler. BreakingPoint turned to AGC Partners co-founder and partner Maria Kussmaul for financial advice and Wilson Sonsini Goodrich & Rosati PC's Brian Beard, Eileen Marshall, Josephine Aiello LeBeau, Laura Merritt, Susan Reinstra and Catherine Schnurr for legal counsel.

In light of the BreakingPoint acquisition, Ixia also on Monday updated its second-quarter revenue guidance to a range of $87 million to $89 million, up from a previous range of $86 million to $89 million. The company also said that its Anue acquisition, which was completed June 4, will add $3 million to $4 million in revenue during the second quarter.