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Agilent To Buy Varian

$1.5 billion deal will bolster agilent’s push into bioanalytics

by Marc S. Reisch
August 3, 2009 | A version of this story appeared in Volume 87, Issue 31

Credit: Agilent
Technician examines microarray slide used to detect chromosomal abnormalities.
Credit: Agilent
Technician examines microarray slide used to detect chromosomal abnormalities.

Agilent Technologies has signed a definitive agreement to acquire Varian for $1.5 billion in cash. The transaction, expected to close by the end of this year, will create a $6.8 billion instrumentation and consumables firm.

“The acquisition is a major step in Agilent’s transformation into a leading bioanalytical measurement company,” says William P. Sullivan, Agilent’s CEO. “While we continue to be a world leader in electronic measurement, our biggest opportunities for future growth are in bioanalytical measurement.”

The $52.00-per-share deal, which represents a 35% premium over Varian’s closing price on July 24, “delivers excellent value for our shareholders,” Varian CEO Garry W. Rogerson says. The combined company will provide a comprehensive set of solutions for energy, environmental, and life sciences customers, he notes.

Santa Clara, Calif.-based Agilent, which has $5.8 billion in sales, spun out of computer maker Hewlett-Packard in 1999. It is a producer of electronic test gear, as well as chemical, pharmaceutical, and forensic analysis tools such as gas chromatographs and mass spectrometers and the reagents and lab automation tools to make them work. Varian, based in Palo Alto, Calif., with $1 billion in sales, will expand Agilent’s product portfolio into atomic and molecular spectroscopy. It will also allow Agilent to enter the market for nuclear magnetic resonance, image, and vacuum technology.

“This is a good deal for Agilent,” says Isaac Ro, a senior analyst with the investment bank Leerink Swann. It will put the firm among the top three bioanalytical instrument makers, which also include Thermo Fisher Scientific and Waters. In addition, Ro says, Varian’s NMR business will place Agilent in the duopoly of NMR firms along with Bruker BioSciences.

Agilent expects to save $75 million annually from cost synergies. Ro says the figure is a conservative estimate and suggests the actual number may be higher as the combined firm, for instance, increasingly sources lower cost components from China.

A spokeswoman for Agilent says it is premature to talk about possible synergies such as cuts to personnel because of the combination. Varian had 3,600 employees and Agilent had 19,000 employees at the end of 2008. In March, however, Agilent said it would cut 2,700 jobs in its electronic measurement segment.



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