Agilent Technologies Inc. (Palo Alto, CA) announced that it is shedding its chip unit and spinning off other assets as it concentrates on its test-and-measurement business. About 1,300 jobs will be cut in the reorganization. Agilent also agreed to sell its 47-percent stake in Lumileds to Royal Philips Electronics for $950 million and the repayment of $50 million in debt. Agilent also plans to spin off its system-on-a-chip and memory test businesses in 2006. Agilent is selling its semiconductor business to the buyout firms Kohlberg Kravis Roberts & Co. and Silver Lake Partners for $2.66 billion.
"Today starts a new chapter of Agilent," said Chief Executive Bill Sullivan. "We have made decisions today for us to be able to focus on our core that we have been a leader in for the last 65 years. We have really tried over the last few years to try to close that gap. We believe that these decisions today are the best way for us to make sure that we can take the discount out of our shares."
Agilent said it will use the cash proceeds of its reorganization for a $4 billion share-repurchase program, and it will call its $1.15 billion convertible debt. The repurchase will begin immediately, while the call is expected to cut its outstanding shares by 36 million. The company, which expects about $200 million in restructuring costs to be largely offset by proceeds from its asset sales, expects to save $450 million. It said the job cuts – about 4.6 percent of its 28,000 employees – will be made through transfers to the divested businesses, attrition and layoffs. Agilent expects the chip divestiture to be completed by October 31, 2005, the end of its current fiscal year.
