15 Nov 2002
3M is buying Corning's Precision Lens Division for USD 850 million in cash.
Corning, the US glass and optical fiber specialist, is to sell its Precision Lens Division to 3M for USD 850 million in cash. The division is a leading maker of lens systems for rear-projection televisions. Based in Cincinnati, US, it employs 1500 people and expects sales of USD 260 million in 2002.
The deal will help Corning pay off some of its debt while making 3M an important supplier in the displays industry. "The sale of Corning Precision Lens is part of an overall plan to improve our financial health as we focus on returning to profitability," said Corning's chief financial officer Jim Flaws. "We will use the proceeds to reduce debt and strengthen our balance sheet."
Financial analysts seem to have mixed opinions on the sale. Although Corning's shares rose 20% on news of the deal, some analysts believe that the firm is making a mistake. They comment that Corning is unwise to sell a strong business to prop up a collapse in sales of optical fiber, especially as the telecoms market does not currently show any signs of recovery. Others say that Corning has got a good price and was wise to sell.
For the third quarter 2002, Corning reported a 7% fall in sales to USD 837 million and a net loss of USD 260 million. It also announced plans to lay off 2200 staff, close two optical fiber production plants (Noble Park, Australia and Neustadt bei Coburg in Germany) and mothball a third (Concord,US).
3M is full of optimism about the deal and believes that the displays sector represents a multibillion dollar growth opportunity. "Adding Corning Precisions Lens' technology for rear projection televisions to 3M's full spectrum of display technologies enhances our business, and will accelerate our growth in the current and next generation consumer television applications," said Andy Wong, vice president of 3M's Optical Systems Division. "Lens systems for large-screen, rear-projection televisions are a great complement to our strong optical film capabilities, which are well-suited to the emerging consumer LCD television segment."
Oliver Graydon is editor of Optics.org and Opto & Laser Europe magazine.