August 15, 2005 – Agilent Technologies Inc. has agreed to a series of actions, including divesting its semiconductor products segment for $2.66 billion, in order to reposition itself as a “pure play” measurement company. Agilent expects to reduce global infrastructure costs by $450 million and infrastructure-related employment by ~1300 jobs.
Agilent is divesting the semiconductor products segment to Kohlberg Kravis Roberts & Co. (KKR) and Silver Lake Partners for $2.66 billion, subject to closing adjustments. It also made a definitive agreement to sell its stake in Lumileds to Royal Philips Electronics for $950 million plus repayment of $50 million of debt from Lumileds. The company also plans to spin off its SOC and memory test businesses as soon as practical in 2006.
Agilent also announced it will return the cash proceeds of the divestitures to its owners through a $4 billion share repurchase program to commence immediately. The company also announced it intends to call its $1.15 billion convertible debenture, which potentially will reduce its outstanding shares by 36 million.
Bill Sullivan, Agilent president and CEO, said that these actions enable Agilent to focus exclusively on realizing its full potential as a measurement company. “It has become increasingly clear that investors also prefer this exclusive focus on the $40 billion measurement market,” Sullivan said.
The company currently expects that the divestitures will be completed by the end of its fiscal year, Oct. 31, 2005, subject to closing conditions, including governmental and regulatory approvals.
This reduction in employment will be accomplished through a combination of employee transfers to the divestiture and spin-off, attrition, and work force reduction. The company expects this restructuring to be largely completed by the middle of FY06, and the roughly $200 million implementation cost to be essentially offset by the proceeds of property and other asset sales as the company reduces its global footprint.