Corning Inc said it would buy out Samsung Display's stake in their LCD glass joint venture in a deal that could see the Samsung Electronics Co Ltd subsidiary take a 7.4% share in the Gorilla Glass maker.
The deal includes a new 10-year LCD display glass supply agreement between Corning and Samsung Display — which makes LCD panels for tablets and televisions — that will add about US$2bil (RM6.3bil) to Corning's annual sales.
Corning shares jumped about 26% to US$19.30 (RM60.82) in extended trading on Tuesday.
Samsung will receive convertible preferred shares with a face value of US$1.9bil (RM5.98bil) and will make an additional US$400mil (RM1.26bil) investment in Corning by subscribing to new convertible preferred shares.
If the preferred shares are converted, Samsung would get a 7.4% stake in Corning. The shares are convertible at US$20 (RM63.03) per share after seven years, with Corning having the option to force conversion if its stock goes above US$35 (RM110.30).
Samsung owns 43% of the South Korea-based joint venture, Samsung Corning Precision Materials Co Ltd (SCP), which was set up in 1995.
Corning will also pay about US$300mil (RM945.45mil) to buy out minority shareholders in the joint venture, which makes active matrix LCD glass used in television sets, notebook computers, desktop monitors, digital cameras and mobile phones.
The US company said the transaction, expected to close in the first quarter of 2014, would add about US$350mil (RM1.1bil) in annual profit before special items.
Corning's chief financial officer, James Flaws, said SCP was set up at a time when the world was more regional.
"What we're able to do here is take a land-locked asset which could only serve Korea, and also an asset which could only serve liquid crystal display technology, and instead transform it to be able to serve any market with any specific glass products," he said on a conference call with analysts.
Corning also reported preliminary results that were in line with market estimates. Full results will be announced on October 30.
Samsung's Galaxy Note products, Nokia's Lumia phones and Droid Razr smartphones made by Google Inc's Motorola business use Corning's scratch-resistant Gorilla Glass.
Corning's shares hit a year-high of US$16.43 (RM51.78) in May after trading as low as US$10.71 (RM33.75) in November. — Reuters
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