Agilent confirms sale of chip business for $2.66 bn
Following much speculation, Agilent Technologies has confirmed that it will sell off its entire semiconductor business unit.
While Philips has bought out the company's stake in Lumileds (see related story), the remainder of the Agilent chip business has been snapped up by two private equity firms.
Kohlberg Kravis Roberts and Silver Lake Partners will acquire the Palo Alto company's semiconductor business for a cool $2.66 billion in cash.
That cash will be returned to Agilent investors through a $4 billion share repurchase program set to begin immediately. The company will then focus on its new strategy as a "pure-play" measurement company, said CEO Bill Sullivan.
Apart from LEDs and fiber-optic components, Agilent also manufactured GaAs-based E-mode PHEMTs at its 6-inch wafer facility in Fort Collins, CO. But according to Stephen Entwhistle from the market analyst firm Strategy Analytics, Agilent has struggled against the incumbent GaAs power amplifier (PA) suppliers in the cell-phone handset sector.
And unlike Freescale, the semiconductor-manufacturing spin-out of Motorola, the new owners of Agilent's GaAs business will not be able to rely on a parent company as a potential customer for these products.
With the former Agilent semiconductor business supplying such a diverse set of products to a wide range of customers, the new owners face a challenge to generate a coherent strategy, added Entwhistle.
And, with the 47% share in Lumileds already sold to Philips, one possibility is that the new owners of Agilent's chip business will seek to break up the unit.
In its most recent financial quarter, which Agilent announced at the same time as the chip sell-off, the semiconductor product group saw a 2% drop in revenue year-on-year to $458 million.
But orders were up very strongly, to $499 million. That represents a 25% increase from last year and 8% sequential growth "“ something that will undoubtedly please the new owners of the business.
