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Agilent Technologies (A)
Agilent announces plans to sell chip unit, shares of Lumileds, and cut jobs
Palo-Alto based Agilent Technologies announced restructuring plans today, involving selling its chip unit to two buyout firms, selling its shares of Lumileds to Royal Phillips Electronics, and cutting up to 1,300 jobs. The deal for the chip unit is worth $2.66 billion, while Phillips is buying the shares of Lumileds for $950 million. One of Agilent's first steps in the restructuring process is to use the proceeds from the deals to buy back $4 billion in common stock, as well as some of their convertible debt.
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Agilent, which was formed in 2000, as a spin-off company from Hewlett Packard, is restructuring to focus on their core business of manufacturing measurement and electronic testing products. Agilent's chief financial officer, Adrian T. Dillon, said, "It's been true since the inception of the company, we've performed more like a sluggish semiconductor company than the world's premiere measurement company.”
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The two firms buying Agilent's chip unit are Kohlberg Kravis Roberts & Co. and Silver Lake Partners. The firms are equal partners in the deal, and say the resulting company will be the largest privately owned semiconductor business in the world. In the deal for shares of lighting company Lumileds, Agilent is selling the 47% it owns of the company to Phillips, which will own 96.5 of Lumileds after the deal. Over the past year, Lumileds had profits of $83 million from sales of $324 million.
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In the third quarter, Agilent reported profits that rose 4% despite revenue that fell 10%. The firm plans on initiating their $4 billion share repurchase program immediately. In terms of restructuring, they plan on cutting costs related to their global infrastructure by $450 million, while also cutting 1,300 jobs. It was not specified how many of those jobs would be related to the divested business, and how many would be the result of direct cuts. Agilent plans on the divestitures being completed by the end of October, pending regulatory approval, and expects their broader restructuring plans to be nearly completed by the middle of the 2006 fiscal year.
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Agilent plans on the proceeds from the deals covering their restructuring costs, which means these deals should have positive impacts for all the companies involved. Kohlberg Kravis Roberts & Co. and Silver Lake Partners gain by attaining the semiconductor unit. Phillips will have own almost all of Lumileds, and Agilent will be able to restructure and focus more on their core business, and the initial goals the company had.
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Profile |
Agilent Technologies is a global diversified technology company that provides enabling solutions to high growth markets within the communications, electronics, healthcare and life sciences industries. The Company has four primary businesses: test and measurement, semiconductor products, healthcare solutions and chemical analysis.
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