Corning Inc. (NYSE:GLW) in a very recent announcement said that it was buying out Samsung and its own joint venture partner from the LCD business. This is one of the biggest announcements to come from this company and shares rose up by as much as 25% for the company following this announcement. Currently, Samsung is the largest maker of LCDs in the world and it holds around 43% of this venture. This stake is going to be bought out by the company and later it will also buy out the minority shareholders of Samsung who hold the rest of the shares of the company.
This is a highly significant standpoint in the history of this 40 year old company. Corning will be the sole supplier of LCD screens to Samsung for the coming ten years. This deal will be finalized by the end of the first quarter of 2014-15. Samsung will revenice shares of Corning Inc. valued at $1.9 billion. Samsung will then invest around $400 million in another piece of Corning shares. This amounts to around 7.5% stake in the company and the conversion price for these shares after a time period of 7 years is $20 per share. Corning has made this deal with the option open to itself if the stock value rises above 35$ per share. Corning is one of the leading smart-phone screen makers, if you are a smart-phone user and your phone uses gorilla glass, you probably have used this company’s product.
In what can be a bid to regain investor confidence before releasing its Q3 earnings, the company has released a preview of its earnings. This is also aimed at investors who may be skeptical of the new deal and the impact that it can have on the company’s books. The company however hopes that it will gain as much as $2 billion in revenues as a result of this deal.
