Corning Inc. (NYSE: GLW) said that its previously announced acquisition of substantially all of the Communication Markets Division (CMD) from 3M is nearlycomplete. The company announced it had closed on all of the targeted assets except for the Germany-based telecommunications system integration services business. 3M issued a press release confirming completion of the sale of the other assets for about $870 million, before closing and other adjustments.
Corning expects the sale of the system integration services to close later this year, subject to customary closing conditions and regulatory approvals. 3M added that this portion of the pending sale is valued at about $30 million, bringing the total value of the deal to approximately $900 million (see "3M agrees to sell Communication Markets Division to Corning").
The acquisition of 3M's CMD is expected to contribute to Corning's goal of increasing its Optical Communications' revenue to $5 billion by 2020. Corning anticipates that the transaction will provide additional sales of $200 million, with one-time integration costs resulting in neutral earnings per share for 2018.
The business includes 3M's fiber optics and copper passive connectivity lines for the telecommunications industry, including xDSL, FTTx, and structured cabling offerings. Beginning in 2019, Corning expects the business will generate global sales of around $400 million, and $0.07 to $0.09 earnings per share. 3M anticipates gaining approximately $0.40 to $0.45 per share from this transaction, net of actions related to the divestiture.
The acquisition broadens Corning Optical Communications' market reach and worldwide customer access, specifically in progressive areas in Europe, the Middle East, and Asia, along with the Central and Latin America regions, and the in-building network market segment. Corning says the deal also extends the optical offerings it can supply to current customers via the CMD's high-bandwidth family, and compliments its "Strategy and Capital Allocation Framework," including investing almost $1 to $3 billion in acquisitions.
"We are excited to welcome our new colleagues to the Corning family and look forward to the telecommunications system integration services team joining us shortly," said Clark S. Kinlin, Corning Optical Communications executive vice president. "As we continue to grow our leadership position in optical communications, the combined force of our people, portfolio, and co-innovation engine strengthens our ability to transform the way the world connects. Our customers around the world count on us to provide what they need to get ahead. We are continually expanding our capabilities and innovating to increase deployment speed and network capability, while reducing the customers' total cost of ownership."
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