PerkinElmer Agrees to Sell IDS to Veritas Capital for $500 Million

Publicly traded medical instrument maker PerkinElmer is selling its Illumination and Detection Services (IDS) business to Veritas Capital Fund, the New York-based private equity firm. The price: approximately $500 million, including IDS’s cash balance.

PRESS RELEASE:

PerkinElmer, Inc. a global leader focused on improving the health and safety of people and the environment, today announced that it has agreed to sell its Illumination and Detection Solutions (IDS) business to Veritas Capital Fund III, L.P., a New York-based private equity firm, for approximately $500 million in cash ($482 million net of payment for acquired cash balances).

IDS includes approximately 3,000 employees and 14 manufacturing facilities worldwide and is a leading global provider of custom-designed specialty lighting and sensor components, subsystems and integrated solutions to major OEMs serving a number of applications within various health, environmental, and security segments. The business is expected to generate revenue of approximately $300 million in 2010.

“The divestiture of our IDS business reduces the complexity of the company and frees up capital to reinvest in our more attractive Human Health and Environmental Health end markets,” said Robert Friel, chairman and CEO of PerkinElmer. “In addition, this transaction should reduce the company’s exposure to more cyclical end markets and improve our top-line growth profile. Furthermore, we would expect adjusted gross margins to improve by over 200 basis points, contributing to higher earnings growth.”

As a result of the agreement to sell IDS, the Company will report the financial results for IDS as a discontinued operation. Consequently, for the third quarter 2010, the Company forecasts organic revenue to grow at a high single digit rate and now forecasts GAAP earnings per share from continuing operations in the range of $0.19 to $0.21. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the Company now forecasts adjusted earnings per share from continuing operations in the range of $0.27 to $0.29.

For the full year 2010, the Company forecasts organic revenue to grow at a high single digit rate and now forecasts GAAP earnings per share from continuing operations in the range of $1.06 to $1.11. On a non-GAAP basis, which includes the adjustments noted in the attached reconciliation, the Company now forecasts adjusted earnings per share from continuing operations in the range of $1.24 to $1.29.

Although the Company has not issued guidance for 2011, the Company expects that the transaction will be $0.08 to $0.10 dilutive in 2011 or 5%-6% based on the current 2011 Thomson First Call consensus of $1.70.

The Company also announced today that its Board of Directors has authorized an increase in the number of shares of the Company’s common stock available for repurchase to 13 million. Purchases will be made through open market transactions or privately negotiated transactions, subject to market conditions and trading restrictions.

The transaction is expected to close by the end of 2010 and is subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.