(Corrects lead to show Corning buying stake from Samsung Electronics unit)
By Chandni Doulatramani and Neha Alawadhi
Oct 22 (Reuters) - 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 percent 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 $2 billion to Corning's annual sales.
Corning shares jumped about 26 percent to $19.30 in extended trading on Tuesday.
Samsung will receive convertible preferred shares with a face value of $1.9 billion and will make an additional $400 million investment in Corning by subscribing to new convertible preferred shares.
If the preferred shares are converted, Samsung would get a 7.4 percent stake in Corning. The shares are convertible at $20 per share after seven years, with Corning having the option to force conversion if its stock goes above $35.
Samsung owns 43 percent of the Korea-based joint venture, Samsung Corning Precision Materials Co Ltd (SCP), which was set up in 1995.
Corning will also pay about $300 million 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 U.S. company said the transaction, expected to close in the first quarter of 2014, would add about $350 million 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.
The company said it earned about 33 cents per share, up from 28 cents in the same quarter last year. Net sales were estimated at $2.1 billion, up from $2 billion.
Full results will be announced on Oct. 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 $16.43 in May after trading as low as $10.71 in November. (Reporting by Chandni Doulatramani and Neha Alawadhi in Bangalore; Editing by Don Sebastian and Ted Kerr)