Agilent Technologies Inc. (A) recently announced that it would redeem $500 million outstanding Convertible Senior Subordinated Notes due 2017, on Oct 20, 2014, at a coupon rate of 6.50%. The aggregate principal amount of the notes is $600 million.
The redemption price of the Notes would be equal to the sum of the principal amount of the Notes outstanding along with accrued but unpaid interest prior to the Redemption Date.
Agilent stated that the redemption of the Notes is consistent with its intention to resize its debt portfolio in connection with the expected divestment of Keysight Technologies, scheduled to be completed by Nov 1, 2014. Following the spinoff, Keysight will commence regular trading on the New York Stock Exchange under the ticker "KEYS", while Agilent will continue to trade as “A”. Keysight will be headquartered in Santa Rosa, CA with over 9,500 employees in 30 countries and focus on the semiconductor testing side of the business.
Additionally, last week, Agilent announced a quarterly dividend of 13.2 cents per share to be paid on Oct 22, 2014, to stockholders of record as of the closure of business on Sep 20.
Agilent Technologies is a broad-based original equipment manufacturer (OEM) of test and measurement equipment. In the recently concluded quarter (third-quarter fiscal 2014), the company reported earnings per share of 78 cents, beating the Zacks Consensus Estimate by 4 cents, driven by continued improvement in its end markets. Also, revenues of $1.77 billion were up 2% sequentially and 6.9% year over year.
Furthermore, in the last reported quarter, the company spent $44 million on cash dividends and used $50 million to repurchase its common stock. At quarter-end, Agilent’s total debt (long-term plus short-term) was $2.22 billion.
We believe the redemption of debt will lower the leverage and interest burden of the company, strengthen its balance sheet and support growth.
Agilent carries a Zacks Rank #3 (Hold). Better-ranked stocks include Ametek Inc. (AME), National Instruments Corporation (NATI) and Cognex Corporation (CGNX). All these stocks have a Zacks Rank #2 (Buy).
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