Summary
Corning Incorporated (GLW) announced on May 12, 2003, an agreement to sell a significant portion of its photonic technologies business to Avanex Corporation. This strategic divestiture is structured as an exchange for Avanex common stock, valued at approximately $25 million at the time of the announcement. In conjunction with this deal, Avanex also announced its intention to acquire Alcatel Optronics, aiming to create a more robust and consolidated photonics player. Corning expects to hold a 17% stake in the combined Avanex entity post-transaction. This transaction is a critical step for Corning as it navigates the prolonged downturn in the telecommunications industry. The company aims to preserve jobs within the divested business and refocus on its core telecommunications segments, including optical fiber, cable, and related hardware. Corning anticipates a pretax charge of $50 million to $70 million in the second quarter related to these actions, with an approximate cash impact of $40 million to $50 million, which includes restructuring charges and a $20 million contribution to Avanex. The company reiterates its commitment to returning to profitability in 2003.
Key Highlights
- 1Corning to sell a significant portion of its photonic technologies business to Avanex Corporation.
- 2Transaction valued at approximately $25 million in Avanex common stock.
- 3Corning to retain a 17% ownership stake in Avanex post-transaction.
- 4Avanex will also acquire Alcatel Optronics, consolidating the photonics market.
- 5Expected to close in the third quarter of 2003, subject to regulatory and shareholder approvals.
- 6Corning anticipates a second-quarter pretax charge of $50 million to $70 million.
- 7Company reaffirms focus on core optical fiber, cable, and hardware businesses, aiming for 2003 profitability.