KKR, Silver Lake in $2.7bn tech buyout

The private equity firms have purchased the semiconductor division of Palo Alto-based Agilent Technologies for $2.7bn, approximately 10x EBITDA.

Kohlberg Kravis Roberts and Silver Lake Partners have agreed to purchase Agilent Technologies’ Semiconductor Products segment for $2.66 billion (€2.21 billion), as the measurement and technology company refocuses its business and sheds non-core assets.

It has been a case of the semiconductor tail wagging the measurement dog.

Adrian Dillon,
 CFO, Agilent Technologies

The chip division manufactures semiconductors for a variety of uses, including military, automotive and computer applications. According to the Asset Purchase Agreement filed with the Securities and Exchange Commission, KKR and Silver Lake are using an adjusted EBITDA of $259.8 million in their valuation of the business, implying an enterprise value of 10 times earnings before interest, taxes, depreciation and amortization. 

Adrian Dillon, the company’s chief financial officer, explained the move to the Associated Press: “It’s been true since the inception of the company, we’ve performed more like a sluggish semiconductor company than the world’s premier measurement company. It has been a case of the semiconductor tail wagging the measurement dog.”

Agilent, which spun off from Hewlett-Packard in 2000, plans to cut around 1,300 jobs and reduce infrastructure costs by $450 million in an attempt to refocus on its core measurement and test businesses. It also announced plans to sell its stake in San Jose, California-based lighting company Lumileds to Royal Philips Electronics and is spinning off its system-on-a-chip and memory test businesses next year.

Agilent’s New York Stock Exchange-traded shares were up $3.92, or 15 percent, closing at $30.33 Monday.

KKR and Silver Lake were also a part of the $11.3 billion SunGard Data Systems buyout, which closed on Thursday. The purchase of the integrated software maker was first announced last March.