Boston, MA 10/24/2013 (wallstreetpr) – If you are a smartphone user and have been using a device with Gorilla glass, then chances are very high that the glass has been manufactured by Corning Incorporated (NYSE:GLW). Just yesterday, shares of Corning Inc. surged by as much as 25% when the company announced one of the biggest newsitem in its corporate history. As per announcement, company would be buying out Samsung and its joint venture partner from the LCD business. As of now, Samsung holds close to 43 percent stake in this joint venture which is world’s largest manufacturer of LCDs. The rest of the equity is held by small stakeholders. As per company’s announcement, it will initially buy out Samsung’s stake. This would be followed by buying out of other minority shareholders.
This marks a significant development in both company’s relation’s 40 year old history. AS per the deal, Corning would be the sole supplier of LCDs to Samsung for next ten years. The deal is expected to be completed by end of first quarter of 2014-15. AS for the deal valuation, Samsung is set to receive preferred shares of Corning worth $1.9 billion. Samsung would then invest an amount of $400 million in another tranche of Corning preferred shares. And if converted, Samsung will receive about 7.5% stake in Corning. The conversion price for these shares is $20 after 7 years. But Corning will also have an option to arm-twist Samsung and force conversion if the stock goes anywhere above $35.
In a bid to ease investor concerns, Corning decided to release a preview of its third quarter earnings. As per company filings, this step by company was aimed at investor’s who would be little skeptical about the deal’s financial impact on Corning’s books. As per company spokesperson, the deal is projected to add around $2 billion in revenues to company’s balance sheet.
