Agilent Technologies Inc. ( A - Analyst Report ) recently completed its acquisition of a Danish cancer diagnostics company, Dako, for $2.2 billion (on a debt-free basis). Agilent called this all-cash deal the largest in its history.

Denmark-based Dako provides antibodies, scientific instruments and software mainly to cancer-related diagnostic labs and also collaborates with drug companies for the development of methods to identify patients likely to benefit from certain therapies. The company reported annual revenues of approximately $240 million in 2010.

Upon closure, Agilent stated that Dako would form its fourth business reporting segment — the Diagnostics and Genomics Group. Earlier, Agilent reported in three segments: Chemical Analysis, Life Sciences and Electronic Measurement.

The acquisition will complement Agilent’s broad portfolio of life science products. The segment has been improving over the last few quarters with the launch of some new products. In the second quarter, the segment generated 27% of total revenue, which was up 1.7% sequentially and 1.1% year over year, driven by strength in the pharma/biotech market.

The latest acquisition will help Agilent expand its global market share and benefit from Dako’s extensive product portfolio. Agilent’s 2010 acquisition of Varian was a big boost to its Chemical Analysis Group, since most of the Varian products were included here.

However, Agilent’s Life Sciences segment also gained, since a few products were included here as well. We believe that both the Dako and Varian acquisitions were prudent, since health care research is a booming market and one that should go on growing in the foreseeable future.

Agilent’s new products, testing systems and acquisitions help it to deliver improved results and maintain its position in an increasingly competitive market. Agilent’s second quarter 2012 earnings exceeded the Zacks Consensus Estimate by 5 cents (6.8%), driven by strength across multiple end markets and product lines. Agilent is about to report its third quarter earnings on August 15, and expects total revenue to be up 2–3% sequentially.

Management is trying to grow its market share by introducing new products and ward off competition from the likes of Teradyne ( TER - Analyst Report ) , Thermo Fisher Scientific, Inc. ( TMO - Analyst Report ) and Danaher Corp. ( DHR - Analyst Report ) .

Currently, Agilent has a Zacks Rank #2, implying a short-term Buy recommendation.