MANHASSET, N.Y. Seeking to reposition itself as a pure-play measurement company, Agilent Technologies Corp. has sold its troubled semiconductor business to equity fund companies Kohlberg Kravis Roberts & Co. (KKR) and Silver Lake Partners for $2.66 billion. The move creates the largest privately-held independent semiconductor company in the world.
In addition to selling its Semiconductor Products Group, Agilent signed 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 confirmed it will spin off its SOC and Memory Test businesses by next year.
Agilent expects the moves to reduce its global infrastructure costs by $450 million, and infrastructure-related employment by 1,300 jobs. The company expects to complete the restructuring by the middle of fiscal 2006.
The divestitures, which EE Times
, ends months of speculation about the fate of Agilent's semiconductor business, which in recent months became a target
of sales rumors.
Speculation still swirls
around who will buy Agilent's test business, with Advantest Corp. and Teradyne Inc. considered leading suitors.
The SPG divestiture is the major part of Agilent's reorganization. Considered a leading supplier of advanced semiconductor components, modules and subsystems for consumer and commercial electronics applications, SPG has approximately 6,600 employees worldwide.
In 2004, the Semiconductor Products Group realized profits of $166 million on sales of $2.02 billion.
Dick Chang, current president of SPG, who will become president and chief executive officer of the New SPG, said in a statement, "This transaction provides an exciting platform for SPG to grow and thrive as a stand-alone enterprise. The New SPG will build on the strength of its existing business platform and take advantage of strategic growth opportunities around the world. We will be better positioned to focus on developing new products, increasing market share, and securing our role among the technology leaders in the semiconductor industry."
KKR and Silver Lake are equal partners in the transaction.
William Sullivan, president and chief executive of Agilent, said in a statement, "We believe that SPG can best realize its full potential as an independent company. As we re-focus Agilent on its core measurement businesses, we are pleased to have found enthusiastic, experienced, and supportive owners for SPG in the alliance of KKR and Silver Lake. Their long-term investing horizon, technology experience, and focus on growth make a compelling partnership that will serve all SPG's constituents well."
The transaction is expected to be completed by the end of Agilent's fiscal year ending Oct. 31.