Agilent Splits: Hewlett-Packard’s DNA Gets A Spin-Off Once More
It certainly feels like déjà vu. After having Bill Hewlett and Dave Packard’s original test and measurement business spun off from Hewlett-Packard Co. into Agilent Technologies more than a decade ago, it is going to happen again. Agilent Technologies has announced in a press release that it will separate into two publicly traded companies. The portfolio in life sciences, diagnostics and applied markets (LDA) will retain the Agilent brand, while the portfolio of electronic measurements (EM) products will spin off into an yet-to-be-named company, temporarily coined as “the new EM Company.” 

Bill Sullivan continues to be at the helm of Agilent with estimated revenue of $3.9 billion in FY13 while Ron Nersesian will be leading the new EM Company with an estimated revenue of $2.9 billion in FY13, effective immediately. The entire transaction is expected to be completed by the end of calendar year 2014, subjected to the satisfaction of customary closing conditions. Agilent shareholders will receive a pro rata distribution of shares in EM Company via a tax-free spin-off. With past experiences of successfully spinning off Agilent from HP and subsequently Avago from Agilent, this process should be relatively smooth, if not better.

As history would have it, the traditional test and measurement business which started with an audio oscillator in a garage, had proven to be the better part of HP’s DNA. For the last decade, Agilent’s stock has gone from a low of circa $11 to surpassing the $50 mark recently. On the other hand, HP’s stock went from circa $15 in 2003 to only above $20 this year, not to mention a series of leadership crisis that it went through.

From the test and measurement perspective, this move could prove to be one that will work out well in the long run. Since the EM group no longer needs to share priorities and resources with the LDA, they can now have a razor sharp focus on what they do best. Rightfully, they should be a more nimble company, with the flexibility and ability to have better speed to new opportunities.

In the near term, at least during the transition period from being Agilent to a new brand, there may arise some unfamiliarity and confusion among customers with the new brand. After so many decades of building the HP brand in test and measurement, there was a tremendous effort in the past to convince customers that Agilent does indeed inherit HP’s excellence in test and measurement. Looks like the new EM Company will face this daunting task once again. It could also be a period of uncertainty for the employees which may be targets of poaching by competitors.

Only time would tell how it will work out for Agilent and this new spin-off company. Wonder what the new brand would be…