JDSU--@ 95 down 7 Pirelli, Corning in Deal
By BEN DOBBIN
Associated Press Writer
CORNING, N.Y. (AP) -- Corning Inc. (NYSE:GLW - news) is buying Pirelli SpA's optical components business for about $3.6 billion, extending its goal of becoming a one-stop shop in the optical network industry that anchors the telecommunications revolution.
The deal announced Wednesday was Corning's biggest so far in an 18-month buying spree totaling more than $10 billion to build up the optical equipment side of its fiber optics business. It is already the world's largest supplier of optical fiber and cable.
``We're in the type of industry that only occurs every generation, where the growth is extremely rapid and there aren't books written yet about the technologies we're developing,'' said Gerry Fine, general manager of Corning's photonic technologies division.
Pirelli, Italy's biggest tire and cable maker, agreed to sell its 90 percent stake in Optical Technologies, its fiber optic telecommunications division. It plans to churn the proceeds back into its tire, telecommunications and energy transmission businesses.
Under the agreement, Corning will pay about $3.4 billion in cash and may hand over an extra $180 million depending on whether certain business milestones are reached. The remaining 10 percent of Optical Technologies is owned by network equipment maker Cisco Systems Inc.
The deal is subject to customary regulatory approvals and is expected to close by the end of the year.
Corning said it intends to keep operating the business in Milan, Italy, to broaden its market presence in Europe and expand its labor force there from 300 to 440 employees by year-end.
Corning, a 149-year-old company based in rural western New York, remodeled itself of late into a highflying technology equipment company and doubled its worldwide payroll to 33,000. Previously known widely for its consumer housewares business, maker of ceramic pie plates and casserole dishes, it sold that business in 1998.
Since then, Corning has expanded its reach into laser, optical switches and other components that form the backbone of the Internet. Its revenues are expected to grow to almost $7 billion this year from $4.7 million in 1999.
``We're very proud of our internal capabilities, but in instances where new technologies come up where we haven't been doing research or our programs aren't doing fast enough, we don't hesitate to go out and buy them,'' Fine said.
Last November, Corning bought a leading laser producer, Oak Industries of Waltham, Mass., in a $1.8 billion stock deal. A month later, the company paid $1.3 billion for the fiber optic systems unit of Simens AG, the German industrial group. In February, it snapped up NetOptix of Sturbridge, Mass., for about $2 billion.
Corning's growth places it among the world's biggest players in the fiber optics industry alongside North American companies like JDS Uniphase, Lucent Technologies and Nortel Networks.
In July, talks between Corning and Canada's Nortel on an optical components merger broke down. The proposed $100 billion deal would have been the second biggest in technology history after the pending Time Warner-America Online deal. |
