Hewlett-Packard (HP) spin-off company Agilent Technologies today revealed it is selling its semiconductor unit to private equity players Kohlberg Kravis Roberts & Co (KKR) and Silver Lake Partners for US$2.6bn.
The former HP division also said it is selling its stake in Lumileds to Philips Electronics for around US$950m.
Agilent has also confirmed plans to sell off its memory test business at some point in 2006 and will commence a US$4bn stock repurchase programme.
The decision to sell off its various divisions coincided with the company’s third-quarter results in which the company saw net income rise to US$104m, up from US$100m in the same period a year ago.
Due to lower costs, net income rose as revenue declined 10pc to US$1.69bn from US$1.89bn a year ago.
It is understood KKR and Silver Lake’s motivation to buy Agilent’s semiconductor products group was driven by major opportunities in the mobile and personal entertainment arenas.
James Greene, a partner at KKR, explained: “We see this as an excellent opportunity to invest in a world-class, highly diversified semiconductor company with excellent cash flow, dedicated management, a unique culture and strong prospects for future growth on a global basis.”
It is understood more than 6,500 workers at Agilent’s semiconductor products group will transfer to the new company.
KKR and Silver Lake will be equal partners in the transaction. Both firms are known for taking a long-term view toward the businesses in which they invest and for their focus on working in partnership with management.
By John Kennedy