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Agilent Prices Senior Notes

Zacks Equity Research

Agilent Technologies Inc. (A) recently announced the pricing of senior unsecured notes aggregating $600 million. These bonds carry a coupon rate of 3.875% and are due to mature in 2023. The offering is expected to close on Jun 21, 2013, subject to customary closing conditions.

Agilent stated that the transaction proceeds would be used for the redemption of its outstanding senior unsecured notes, maturing Jul 2013. The remaining net proceeds would be used for general corporate purposes, share repurchases and to pay the expenses related to its previously announced restructuring program.

BNP Paribas Securities Corp., Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Bank Securities Inc. will be acting as joint book-running managers for the offering.

Agilent Technologies is a broad-based original equipment manufacturer (:OEM) of test and measurement equipment. In the recently concluded second quarter, the company spent $41 million on cash dividends and used $140 million to repurchase its common stock.

At quarter-end, Agilent had $2.11 billion in long-term debt on its balance sheet. Currently, the company’s debt-to-total capitalization ratio is only 28.4%, which will increase after the issuance of these notes.

We believe that Agilent has a strong balance sheet, which will help the company to capitalize on investment opportunities and make strategic acquisitions, further improving its growth prospects. We believe that the senior notes offering will bring down its cost of capital, thus strengthening the company’s balance sheet and supporting its future growth.

Currently, Agilent has a Zacks Rank #3 (Hold). Other stocks that have been performing well and are worth a look include Aspen Tech Inc (AZPN), SAP AG (SAP) and Pegasystems Inc. (PEGA), all carrying a Zacks Rank #1 (Strong Buy).

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