Corning Inc. (GLW) said its will take control of a joint venture with Samsung Electronics Co.'s (SSNHZ) business that makes LCD glass in Korea and receive a $1.9 billion investment in a series of transactions to strengthen collaboration between the two companies.
Corning shares were up 20% at $18.35 in recent after-hours trade.
Corning's board also authorized an additional $2 billion of share buybacks through the end of 2015, contingent on the transaction closing.
The company, which relies on sales of LCD-TV glass for the bulk of its profit, also projected third-quarter core earnings of 33 cents a share on core sales of $2.1 billion. Analysts polled by Thomson Reuters recently expected per-share profit of 32 cents and revenue of $2.1 billion.
Samsung Display, which currently owns 43% of the venture, Samsung Corning Precision Materials Co., after redeeming its interest in the venture, would invest in $1.9 billion of new Corning convertible preferred shares. Samsung also would subscribe to an additional $400 million investment in Corning.
The combined investment would give Samsung Display a 7.4% stake in Corning on an as-converted basis.
The agreement also includes a long-term LCD glass supply agreement between the companies through 2023 and aims to strengthen their technology collaborations on strategic product development and commercialization initiatives.
"Shareholders will benefit from access to $1.2 billion which represents Corning's share of existing cash on [the venture's] balance sheet, as well as the cumulative incremental free cash flow going forward, which could total $2 billion over the next four years," Chairman and Chief Executive Wendell P. Weeks said.
Corning also expects the integration of its global fusion glass assets to lead to cost savings of $100 million in 2015 and more afterward. The company anticipates the deal will add 20% to its core per-share earnings in 2014 and 2015.
Mr. Weeks also said that with the latest quarter, the company would post its fourth consecutive quarter of core earnings growth by improving performance in its nondisplay business and tightly controlling costs. The company also is pleased with another quarter of moderate price declines for LCD glass, he added.
Corning anticipates that its fourth-quarter results will be lower than during the third quarter. The company plans to release its third-quarter financial report and more details on its fourth-quarter outlook Oct. 30.
