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Corning Expands Fiber Optic Business Through Acquisition Of 3M Unit


Corning Inc. will spend $900 million to buy a 3M unit, a move to complement and expand its offerings to the fiber optic market.  The company announced it is acquiring the Austin, Texas-based 3M Communications Markets unit.

Corning's takeover will add about $400 million in sales to Corning's revenues and 7 cents to 9 cents per share in annual earnings by 2019, the company said in a statement accompanying the announcement.

"This transaction expands both our global market reach and our high-bandwidth portfolio," said Clark S. Kinlin, executive vice president, Corning Optical Communications. "It also provides new co-innovation opportunities and enhances our ability to serve customers globally.”

3M's Communications unit produces connectors, mounting panels , distribution terminals among other items used in the installation of fiber optic infrastructure. Corning already produces some complementary products, but the 3M acquisition will greatly expand the offerings. The 3M unit has approximately 500 employees.

Corning is the world's leading producer of fiber optic cable, recently winning a $1 billion, three-year agreement with Verizon.

Corning officials estimate the deal values 3M's unit at less than seven times forward looking operating earnings projections taking into account savings from synergies expected in the combination.

Last year, Corning's optical communications unit reported earnings of $245 million on sales of $3 billion. In the recently completed third quarter, Corning reported earnings of $102 million on sales of $917 million, saying the sales number represented a 15 percent increase over the same period one year ago.

Source: Wire World