Hewlett Packard (HP) Announced the Spin-Off of Its Agilent Technologies

question 96

Essay

Hewlett Packard (HP) announced the spin-off of its Agilent Technologies unit to focus on its main business of computers and printers, where sales have been lagging behind such competitors as Sun Microsystems. Agilent makes test, measurement, and monitoring instruments; semiconductors; and optical components. It also supplies patient-monitoring and ultrasound-imaging equipment to the health care industry. HP will retain an 85% stake in the company. The cash raised through the 15% equity carve-out will be paid to HP as a dividend from the subsidiary to the parent. Hewlett Packard will provide Agilent with $983 million in start-up funding. HP retained a controlling interest until mid-2000, when it spun-off the rest of its shares in Agilent to HP shareholders as a tax-free transaction.
-Discuss the reasons why HP may have chosen a staged transaction rather than an outright divestiture of the business.

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Definitions:

Applied Training Site

An external location where students or employees receive practical experience and training relevant to their field of study or work.

Confidentiality

The principle of keeping certain information private, not disclosing it without proper authorization or necessity.

Immunizations

Administration of a vaccine to protect susceptible individuals from communicable diseases.

Half Brother

A male sibling who shares one biological parent with another sibling, making them genetically half-related.