Corning Incorporated (GLW) Buys Samsung Stake In LCD JV, Signs 10 Year Deal

Posted Oct 23, 2013

Corning Incorporated (NYSE:GLW) said that they were going to buy out Samsung Display’s stake in their LCD glass joint venture.  Samsung Display could possibly take a 7.4% share in Corning as part of the deal.  Corning is best known for developing the Gorilla Glass materials that are used in many smartphones on the market today.

This deal also includes a new ten-year LCD display glass supply agreement between Corning and Samsung Display.  Samsung Display designs LCD panels for tablets and televisions.  This deal is also expected to add around $2 billion to Corning’s annual sales.  Samsung is going to receive convertible preferred shares with a face value of $1.9 billion and they will make an additional $400 million investment in Corning by subscribing to new convertible preferred shares.

Samsung will get a 7.4% stake in Corning if the preferred shares are converted.  The shares are convertible at $20 per share after 7 years and Corning will have the option to force conversion if the stock goes above $35.  Samsung currently owns 43% of the joint venture called Samsung Corning Precision Materials Co Ltd (SCP).  The joint venture was created in 1995.

Corning is also going to pay around $300 million to buy out minority shareholders in the joint venture.  The joint venture also makes active matrix LCD glass used in TV sets, notebooks, desktops, digital cameras, and phones.  The transaction is expected to close in Q1 2014.  Corning said that the transaction would add around $350 million in annual profit before special items.

[Source: Reuters]