Varian purchase cuts Agilent’s risk

Article Excerpt

AGILENT TECHNOLOGIES INC. $31 (New York symbol A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 348.0 million; Market cap: $10.8 billion; Price-to-sales ratio: 2.3; No dividends paid; WSSF Rating: Average) makes testing systems that help manufacturers improve the quality of electronic products, such as cellphones and high-speed Internet equipment. It also makes measurement equipment for medical-research labs and drug developers. The company has completed its $1.5-billion purchase of California-based Varian Inc. Varian makes a wide range of medical and drug-testing equipment, such as mass spectrometers that detect and measure substances in blood and other patient samples. It also makes vacuum pumps and equipment that helps keep labs clean. Medical-equipment demand is much less cyclical than electronic-testing products. As well, clients must buy replenishable materials, like filters, for Varian’s products. That gives Agilent a new source of recurring revenue. So adding Varian cuts Agilent’s risk. Agilent issued $750 million of new senior notes to help pay for Varian. That brought its total…