The US-based global pioneer in fiber optic industry, Corning Incorporated will buy another world-famous fiber optic components maker 3M Communications’ Texas-based unit. The deal worth US$900 million will make corning strong in the field of fiber optic accessories and components. Corning will acquire substantial stakes of all of 3M’s Communication markets division, a press release from Corning reveals. This move will strengthen Corning’s global market reach and will expand its product portfolio for high bandwidth solution market.
Corning has entered into agreements with 3M to purchase substantially all of 3M’s Communication Markets Division in a cash transaction and the acquisition is expected to close during 2018, subject to customary closing conditions and regulatory approval.
The press release from Corning says it’s ‘Optical Communications’ segment will acquire approximately $400 million in annual sales of high bandwidth and optical fiber products. The effective enterprise value of the transaction is less than 7 times the Communication Markets Division’s estimated forward-annual adjusted EBITDA, including expected run-rate synergies. Corning expects the transaction to add $0.07-$0.09 to 2019 EPS.
Corning is already a leader in fiber optic solution market and leads in optical passive components. Corning optical fibers and cables are sold worldwide and the company has manufacturing divisions in all continents. The current acquisition transaction expands both our global market reach and our high-bandwidth portfolio. Corning also provides new co-innovation opportunities and enhances its ability to serve customers globally.
The pending acquisition is part of Corning’s multi-year Strategy and Capital Allocation Framework, which is designed to create significant value for shareholders by focusing on the company’s portfolio and utilizing its financial strength. A key component of the Framework is the company’s plan to invest approximately $1 billion to $3 billion in acquisitions. When complete, this acquisition will augment Corning’s Optical Communications global market access and expand its broad portfolio of high-bandwidth optical connectors, assemblies, hardware, and accessories for Carrier Networks, Enterprise LAN, and Data Center solutions.
3M’s Communication Markets Division is headquartered in Austin, Texas, and has a dedicated manufacturing facility in Pontchâteau, France, and operations in Hannover, Germany. The acquisition is subject to consultation or information requirements with relevant works councils, as well as customary closing conditions and regulatory approvals. 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.
In the past, Corning had acquired the fiber optic business of Samsung, Korea that helped the company to deliver its products effectively and competitively to the Middle East and African countries. Corning had recently won a three-year supply agreement with Verizon, which is worth US$1 billion and had reported earnings of US$102 million from US$917 million sales.
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