One company will focus on life sciences, diagnostics and applied markets, retaining the Agilent name. The other will be comprised of Agilent’s range of electronic measurement products, the Santa Clara, California-based company said in a statement today. The separation is expected to occur through a tax-free spinoff of the measurement business to Agilent shareholders.
Agilent, spun out of HP in 1999, has had four major spinoffs itself since 2005. As Agilent’s life science and diagnostics business has grown, it has attracted health-care investors who have had a hard time valuing the company’s electronic measurement business, said Ross Muken, an analyst with International Strategy & Investment Group LLC in New York. The split should help drive Agilent’s share price higher with a different group of investors who can focus just on the health-care assets, he said.
“There will be a new shareholder base that can appreciate each of the assets for what they are, which are extremely high quality businesses that are well run,” said Muken in a conference call with clients. “We think this is still, despite the move, one of the most attractive stocks.”
Agilent rose 3.4 percent to $50.98 at the close in New York. The shares have gained 25 percent this year.
After the spinoff, Agilent is expected to have $3.9 billion in revenue in fiscal year 2013 and pay a dividend of at least the current level, the company said. The electronic measurement business, which has yet to be named, will have about $2.9 billion in revenue in 2013 and isn’t expected to pay an initial dividend.
“Agilent’s history is one of reinvention,” said Bill Sullivan, Agilent president and chief executive officer, in a conference call with analysts. “We are once again making a bold move to ensure a future of sustainable growth.”
He said each of the businesses is strong enough financial to compete on its own and he doesn’t expect any major acquisitions or divestitures.
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