GLW Corning Inc

Corning Inc. (GLW) announced that it has entered into an agreement with Becton, Dickinson & Co. (BDX) to buy a major portion of its Discovery Labware unit for about $730 million in cash. The acquisition is expected to be completed later this year, depending on certain customary closing conditions, including receipt of regulatory approvals.

The Discovery Labware unit has operations in Massachusetts, North Carolina, and the United Kingdom, and boasts of extensive dealer networks in Asia, Europeand North America.

Upon the closing of the acquisition, Corning will integrate four of the Discovery Labware unit's main product platforms into Corning's Life Sciences segment. These product platforms include plastic consumable labware, liquid-handling products, cell-based assays and cell cultureware, as well as ADME research.

The company said that the acquisition will enhance Corning’s broad portfolio of life sciences products and expand its annual revenues by 40%. In the fourth quarter, Corning’s Life Sciences business accounted for around 8% of revenue, which was down 6.5% sequentially but up 2.1% from a year ago.

The deal will help Corningto expand its global market share and benefit from the Discovery Labware unit's extensive product portfolio and established dealer network. In December last year, Corning acquired Mediatech, which was also integrated into Corning's Life Sciences segment to augment its sales.

Corning’s innovations, technologies and acquisitions help it to deliver improved results and maintain its position in an increasingly competitive market. Corning delivered a decent fourth quarter, beating the Zacks Consensus Estimates by 8 cents or 26.5%. Corning is set to report its first quarter 2012 earnings on April 27, and expects the Life Sciences business to be up 10% sequentially.

Corning does not expect the acquisition to have any impact on its 2012 financials, but believes that the transaction will be slightly accretive in 2013. Additionally, the company stated that the acquisition will aid in achieving its $10 billion revenue target in the next few years.

However, Corning faces significant competition due to market saturation, pricing pressure and product launches. For its hardware and equipment products, the company faces stiff competition from the likes of 3M Company (MMM), Tyco Electronics, Ltd. (TEL), Furukawa OFS, CommScope and ADC Communications.

Corning shares currently carry a Zacks #4 Rank, which translates into a Sell rating for the short term (1–3 months).

 
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