KKR, Silver Lake unload Agilent unit

The $2.6bn buyout of Agilent is not yet finished, but KKR and Silver Lake have already agreed to unload Agilent’s storage division through a $425m sale to PMC Sierra.

Kohlberg Kravis Roberts and Menlo Park-based Silver Lake Partners haven’t even completed their $2.66 billion (€2.22 billion) acquisition of Agilent’s Semiconductor Products Group (SPG), but that hasn’t stopped the investors from divesting part of the business. The group agreed to sell the storage semiconductor unit of SPG to PMC-Sierra in a roughly $425 million deal.

KKR and Silver Lake initially announced the acquisition of Agilent’s semiconductor business in August. While this sale to PMC comes before KKR and Silver Lake have even closed that deal, it does not necessarily reflect that the investors intend to break up the business and sell the parts.

Silver Lake managing director John Joyce said at the time of the original transaction the firms plan to “build upon its already strong foundation”, while KKR partner James Greene cited its “strong prospects for future growth on a global basis” in the same statement.

Meanwhile, a spokeswoman for KKR told PEO that the sale of the storage unit was the result of strong interest demonstrated on the part of PMC Sierra, rather than a concerted effort by KKR and Silver Lake to divest the division. The spokeswoman added that KKR and Silver Lake “consider themselves long term investors” in SPG.

Prior to the sale of the storage semiconductor business, SPG generated annual revenues of $2 billion. The company is a supplier of advanced semiconductor components to the mobile phone, network and broad optoelectronic markets. The business being acquired by PMC-Sierra currently operates as the I/O Solutions division of SPG. The unit consists of roughly 240 employees and operates design centres in Santa Clara and Roseville, California and in Singapore.

The deal is seen closing in January of next year, subsequent to the expected closing date of the KKR and Silver Lake acquisition of SPG, which has been pushed back to around the start of December.

PMC Sierra, in a statement, said the acquisition would be immediately accretive to its performance.

A source close to the deal, said PMC had never expressed interest in competing with KKR and Silver Lake in the acquisition of SPG, but had approached Agilent about buying the storage business prior to its sale of SPG to the private equity buyers.

KKR and Silver Lake were advised by Citigroup and Lehman Brothers, while Latham & Watkins provided legal counsel.