Agilent Technologies plans to announce a major reorganization today, including the sale of its semiconductor business, a spinoff of its chip testing unit and a major share buyback program, executives close to the company said.
Over the weekend, Agilent, which was spun off from Hewlett-Packard in 1999, was working out the details of an agreement to sell the semiconductor business to two private equity firms, Kohlberg Kravis Roberts and Silver Lake Partners, for about $2.66 billion, the executives said.
The deal would be one of the largest purchases of a technology business by private equity investors. The company also plans to spin off its chip testing business as a separate company and buy back $4 billion of its shares, the executives said.
The semiconductor business has struggled in recent years amid a downturn in technology spending. Reports of Agilent's interest in selling the division first surfaced in June after Young K. Sohn, a senior vice president and former president of the semiconductor products group, left the company. No reason was given for his departure.
Agilent was spun off from Hewlett-Packard as part of a corporate reorganization. But the company, which is based in Palo Alto, Calif., and has about 28,000 employees worldwide, is close to the roots of the original Hewlett-Packard, which was founded by two Stanford graduates in the 1930s to make testing and measurement equipment for the electronics industry.
In its annual report, Agilent said its chip business improved in 2004, with revenue growing 27 percent over 2003. For the year, the division had a profit of $166 million on sales of $2.02 billion.
The division employed about 6,800 people as of last year. It makes chips for mobile phones, printers and PC peripherals. The business is also part of a joint venture, Lumileds, with Philips Electronics, that develops and sells light-emitting diodes.
The division also has a smaller business that makes networking products for high-speed data communications.
Agilent's semiconductor unit has generally had lower profit margins than the company's core testing and measuring business.