Agilent Technologies
Inc. (NYSE: A) today announced plans to separate into two publicly traded
companies: one in life sciences, diagnostics and applied markets (LDA) that
will retain the Agilent name, and the other that will be comprised of Agilent's
current portfolio of electronic measurement (EM) products. The separation is
expected to occur through a tax-free pro rata spinoff of the EM company to
Agilent shareholders.
"Agilent has
evolved into two distinct investment and business opportunities, and we are
creating two separate and strategically focused enterprises to allow each to
maximize its growth and success," said William (Bill) Sullivan, Agilent
president and CEO.
"Agilent's history
is one of reinvention, starting with our own separation from HP and including
four major spinoffs since 2005. We are once again making a bold move, as we
have done many times in the past, to ensure a future of sustainable growth for
both the LDA and EM companies," he said. "We are focused on making
this transition seamless for our customers."
Benefits
Agilent believes that
the separation will result in material benefits to the standalone companies:
- Greater management focus on the distinct businesses of LDA and EM
- Ability for the LDA company to devote resources to the higher-growth LDA business, while reducing exposure to the more cyclical EM industry
- Ability for the EM company to devote resources to its own growth that were previously used to capitalize LDA
- Two independent and unique investment profiles
- Both companies will be well capitalized, having strong balance sheets and investment-grade profiles with target debt-to-EBITDA ratios below 2.0x
The
New Agilent
The new Agilent will be
a global leader in life sciences, diagnostics and applied markets, with an
attractive recurring revenue base, balanced geographic revenue profile, growth
opportunities in emerging markets, molecular diagnostics and clinical markets,
and significant margin-expansion opportunities. FY13 estimated revenues are
$3.9 billion. It is expected that the new Agilent will continue to pay a
dividend at least at the present yield.
Bill Sullivan is
president and CEO of Agilent, and Didier Hirsch continues as CFO.
EM
Company
The new EM company will
be the world's premier electronic measurement company, with a leading position
in major markets including communications; aerospace and defense; and
industrial, computers and semiconductors. FY13 estimated revenues are $2.9
billion. The EM company initially is not expected to pay a dividend.
Ron Nersesian, who has
been Agilent's president and chief operating officer, is executive vice
president of Agilent and president and CEO-designate of the new EM company,
effective immediately. Neil Dougherty, who has been Agilent's vice president
and treasurer, is vice president of Agilent and CFO-designate of the new EM
company.
"The board and I
believe Ron is the right leader for the new company," said Sullivan.
"He has an excellent track record of running this business, and he has the
vision and expertise to position the new company for accelerated growth and
success."
Transaction
Details
The Agilent board of
directors granted initial approval to pursue the separation plan at its meeting
on Sept. 18.
Under the plan, Agilent
shareholders will receive a pro rata distribution of shares in the new EM
company via a tax-free spinoff. Although there is no assurance that the
separation will be completed within this timeframe, the transaction is targeted
to be completed by the end of calendar 2014, subject to the satisfaction of
closing conditions, including, among others, obtaining final approval from the
Agilent board of directors, satisfactory completion of financing, receipt of
tax opinions, receipt of favorable rulings from the Internal Revenue Service,
the effectiveness of a Form 10 filing with the Securities and Exchange
Commission, and satisfying foreign regulatory requirements.
The spinoff is not
anticipated to impact Agilent's guidance for fiscal year 2013. The company is
expected to incur one-time charges related to the transaction during the
periods preceding the separation, to be quantified at a later date.
For
More Information
Agilent will host a conference
call today at 5:30 a.m. (Pacific Time). This event will be webcast live in
listen-only mode. Listeners may access the webcast and accompanying slides at www.investor.agilent.com.
The webcast will remain available on the website for 90 days.
A telephone replay of
the conference call will be available at 7:30 a.m. (Pacific) today through
Sept. 26, 2013. The replay number is +1 888 286-8010; international callers may
dial +1 (617) 801-6888. The passcode is 63085954.
For more details, see
the fact sheets for Agilent and
the new EM company.
About Agilent Technologies
Agilent Technologies
Inc. (NYSE: A) is the world's premier measurement company and a technology
leader in chemical analysis, life sciences, diagnostics, electronics and
communications. The company's 20,500 employees serve customers in more than 100
countries. Agilent had revenues of $6.9 billion in fiscal 2012. Information
about Agilent is available at www.agilent.com.
Forward-Looking
Statements
This news release
contains forward-looking statements (including, without limitation, information
and future guidance on the company's goals, priorities, the planned separation
of our Electronic Measurement Group, revenues, demand, growth opportunities, customer
service and innovation plans, new product introductions, financial condition,
earnings, the company's ability to pay dividends, ability to access capital
markets, the continued strengths and expected growth of the markets the company
sells into, operations, operating earnings, and tax rates) that involve risks
and uncertainties that could cause results of Agilent to differ materially from
management's current expectations. The words "anticipate,"
"plan," "estimate," "expect," "intend,"
"will," "should," "forecast,"
"project," and similar expressions, as they relate to the company,
are intended to identify forward-looking statements.
In addition, other
risks that the company faces in running its operations include the ability to
execute successfully through business cycles; the ability to successfully adapt
its cost structures to continuing changes in business conditions; ongoing
competitive, pricing and gross margin pressures; the risk that our cost-cutting
initiatives will impair our ability to develop products and remain competitive
and to operate effectively; the impact of geopolitical uncertainties on our
markets and our ability to conduct business; the ability to improve asset
performance to adapt to changes in demand; the ability to successfully introduce
new products at the right time, price and mix, and other risks detailed in the
company's filings with the Securities and Exchange Commission, including our
quarterly report on Form 10-Q for the quarter ended July 31, 2013. Agilent
undertakes no responsibility to publicly update or revise any forward-looking
statement.
(1) FY13 numbers are estimates based on company
guidance provided on Aug. 14, 2013. They are not a confirmation of guidance.