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Agilent Cashes Chips for Stability

Agilent decided it could romance investors with an auction of its semiconductor business, expected to end this week. Its share price soared $1.36, or nearly 6%, to $25.70, on July 5 after published reports that the company had moved close to a deal to sell the unit. The report, which first appeared in The Wall Street Journal, said a group of private-equity firms, led by buyout specialists Kohlberg, Kravis Roberts (KKR) and Silverlake Partners, were favored to win an auction run by Goldman Sachs.


The sale would help Agilent in two ways. Analysts believe it would fetch $2 billion or more, helping boost its cash reserves. That would please investors, who increasingly demand that companies return cash in the form of dividends or stock buybacks. "Given the paltry interest rate Agilent is earning on its cash balances, we are curious about the company's plans for investing or redistributing this cash to shareholders," Morningstar analyst Mark Lanyon wrote in a June report.

The sale would also delight investors by ending Agilent's exposure to one of the riskiest and most volatile sectors, the semiconductor market. All but the biggest and most powerful players have trouble making a profit in that arena.
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