DOW JONES NEWSWIRES PerkinElmer Inc. (PKI) said it has agreed to sell its Illumination and Detection Solutions business to private-equity firm Veritas Capital Fund III LP for about $500 million in cash. The company, which sells analytical products and services to the health-care and industrial sectors, plans to use about $470 million in net after-tax cash proceeds for possible acquisitions and stock repurchases, and the board increased its buyback program by 13 million shares. PerkinElmer, which said it would report the segment as a discontinued operation, also forecast third-quarter earnings from continuing operations of 27 cents to 29 cents, while analysts were looking for 35 cents, according to a poll by Thomson Reuters. The company also forecast 2010 earnings from continuing operations of $1.24 to $1.29. Analysts estimated $1.27. Chairman and Chief Executive Robert Friel said the divestiture "reduces the complexity of the company and frees up capital to reinvest in our more attractive Human Health and Environmental Health end markets." The deal also should reduce PerkinElmer's exposure to more cyclical markets and lead to higher revenue and adjusted gross margins, Friel said. The Illumination and Detection Solutions business, which has about 3,000 employees and 14 manufacturing facilities worldwide, makes custom-designed specialty lighting and sensor components for manufacturers of health, environmental and security products. It is expected to generate about $300 million in revenue this year. This month, PerkinElmer reported its second-quarter profit nearly tripled, topping forecasts, on strong revenue growth in the environmental health division. The company saw revenue slide last year as the recession took a toll on its research and environmental businesses. But Friel has said those pressures are easing. And the company has been active in acquisitions. Shares were at $21, down 1 cent, in after-hours trading. -By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; kathy.shwiff@dowjones.com
