UPDATE 2-Corning to buy out Samsung from LCD JV, signs 10-yr supply deal

Reuters

(Corrects lead to show Corning buying stake from SamsungElectronics unit)

By Chandni Doulatramani and Neha Alawadhi

Oct 22 (Reuters) - Corning Inc said it would buy outSamsung Display's stake in their LCD glass joint venture in adeal 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 supplyagreement between Corning and Samsung Display -- which makes LCDpanels for tablets and televisions -- that will add about $2billion to Corning's annual sales.

Corning shares jumped about 26 percent to $19.30 in extendedtrading on Tuesday.

Samsung will receive convertible preferred shares with aface value of $1.9 billion and will make an additional $400million investment in Corning by subscribing to new convertiblepreferred shares.

If the preferred shares are converted, Samsung would get a7.4 percent stake in Corning. The shares are convertible at $20per share after seven years, with Corning having the option toforce 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 setup in 1995.

Corning will also pay about $300 million to buy out minorityshareholders in the joint venture, which makes active matrix LCDglass used in television sets, notebook computers, desktopmonitors, digital cameras and mobile phones.

The U.S. company said the transaction, expected to close inthe first quarter of 2014, would add about $350 million inannual profit before special items.

Corning's chief financial officer, James Flaws, said SCP wasset up at a time when the world was more regional.

"What we're able to do here is take a land-locked assetwhich could only serve Korea, and also an asset which could onlyserve liquid crystal display technology, and instead transformit to be able to serve any market with any specific glassproducts," he said on a conference call with analysts.

Corning also reported preliminary results that were in linewith market estimates.

The company said it earned about 33 cents per share, up from28 cents in the same quarter last year. Net sales were estimatedat $2.1 billion, up from $2 billion.

Full results will be announced on Oct. 30.

Samsung's Galaxy Note products, Nokia's Lumiaphones 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 aftertrading as low as $10.71 in November. (Reporting by Chandni Doulatramani and Neha Alawadhi inBangalore; Editing by Don Sebastian and Ted Kerr)

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