By Tess Stynes
Corning Inc. (GLW) said its will take control of a joint venture
with Samsung Electronics Co.'s (SSNHZ) business that makes LCD
glass in Korea and receive a $1.9 billion investment in a series of
transactions to strengthen collaboration between the two
companies.
Corning shares were up 20% at $18.35 in recent after-hours
trade.
Corning's board also authorized an additional $2 billion of
share buybacks through the end of 2015, contingent on the
transaction closing.
The company, which relies on sales of LCD-TV glass for the bulk
of its profit, also projected third-quarter core earnings of 33
cents a share on core sales of $2.1 billion. Analysts polled by
Thomson Reuters recently expected per-share profit of 32 cents and
revenue of $2.1 billion.
Samsung Display, which currently owns 43% of the venture,
Samsung Corning Precision Materials Co., after redeeming its
interest in the venture, would invest in $1.9 billion of new
Corning convertible preferred shares. Samsung also would subscribe
to an additional $400 million investment in Corning.
The combined investment would give Samsung Display a 7.4% stake
in Corning on an as-converted basis.
The agreement also includes a long-term LCD glass supply
agreement between the companies through 2023 and aims to strengthen
their technology collaborations on strategic product development
and commercialization initiatives.
"Shareholders will benefit from access to $1.2 billion which
represents Corning's share of existing cash on [the venture's]
balance sheet, as well as the cumulative incremental free cash flow
going forward, which could total $2 billion over the next four
years," Chairman and Chief Executive Wendell P. Weeks said.
Corning also expects the integration of its global fusion glass
assets to lead to cost savings of $100 million in 2015 and more
afterward. The company anticipates the deal will add 20% to its
core per-share earnings in 2014 and 2015.
Mr. Weeks also said that with the latest quarter, the company
would post its fourth consecutive quarter of core earnings growth
by improving performance in its nondisplay business and tightly
controlling costs. The company also is pleased with another quarter
of moderate price declines for LCD glass, he added.
Corning anticipates that its fourth-quarter results will be
lower than during the third quarter. The company plans to release
its third-quarter financial report and more details on its
fourth-quarter outlook Oct. 30.
Write to Tess Stynes at tess.stynes@wsj.com
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