Victor J. Blue/Bloomberg
shares are trading higher Monday after the glass company agreed to repurchase a block of 35 million shares—about 4% of the total outstanding—from Samsung Display.
Samsung Display has been an investor in Corning (ticker: GLW) since 2014, as part of a transaction in which Corning acquired full ownership of a previous joint venture called Samsung Corning Precision Materials. Samsung has held 115 million preferred Corning shares, and is now converting all of those to common shares. (Corning notes that its common stock has a 2.2% dividend yield, higher than the preferred shares.)
After the repurchase, Samsung Display will hold 80 million Corning shares, or about 9% of the company’s total shares outstanding. Samsung Display has committed to maintaining its ownership stake until at least 2028.
“Corning is a great partner and we are pleased to have an opportunity to strengthen and extend our nearly 50-year relationship,” Samsung Display CEO Joo-Sun Choi said in a statement. “Our latest seven-year commitment reaffirms Samsung’s confidence in the value of Corning’s capabilities, our ongoing technology collaborations, and our combined innovation leadership.”
Corning noted that since the completion of the transaction with Samsung in 2014, Corning has reduced its share count by more than 40%, and increased its quarterly dividend by 140%. The company said that the agreement with Samsung “marks the resumption of share repurchases” by the company.
“We’re confident in our future performance and cash-generation potential and pleased to resume share buybacks,” Corning Chief Financial Officer Tony Tripney said in a statement. “Repurchasing 4% of our shares through this transaction is a great start. Additionally, the agreement allows payment for the repurchase over two years, providing us with flexibility.”
Tripney noted that with this transaction the company “eliminates the entire class of preferred shares, improves our capital structure, is accretive to EPS, and reduces our aggregate dividend commitment. We’ve seized a great opportunity for the company and for our shareholders.”
Corning stock is up 2.2%, to $44.97.
Write to Eric J. Savitz at eric.savitz@barrons.com
