Samsung eyes 7.4 percent stake in Gorilla Glass maker Corning

In a complicated swapping of a stake in a joint venture with convertible preferred shares, Samsung plans to acquire a piece of Corning.

Corning

Samsung Display, a subsidiary of Samsung Electronics, has inked a deal with Gorilla Glass maker Corning that could send shockwaves through the mobile market.

As part of the deal announced Tuesday, Samsung Display will hand over its 43 percent stake in a joint venture between the companies, called Samsung Corning Precision Materials, that produces LCD glass in Korea. In return, Samsung will receive $1.9 billion in convertible preferred shares and will invest another $400 million to get yet more shares. If those shares are converted -- and they likely would be -- Samsung will own 7.4 percent of Corning.

Samsung and Corning have had longstanding relationships in the display business, dating back to the 1970s to a cathode ray tube deal. Corning didn't provide any details on the nature of the new relationship, but did say that the agreement will end up improving "collaborations on strategic product development and commercialization initiatives."

Still, there might be more here than a simple partnership. Major companies, including Samsung's chief competitor, Apple, rely on Corning technology for their display needs. That Samsung will be a Corning partner and that the companies will work together to deliver new technologies could mean Samsung's competitors will be locked into using Corning's products. In turn, Samsung will generate some revenue on the sale of competitor products.

Of course, that's nothing new for Samsung. Apple, for instance, has relied on Samsung's processor business to deliver its own mobile chips. There's talk, however, that Apple is trying to reduce its reliance on Samsung, given their ongoing litigation.

Corning expects the Samsung deal to close in the first quarter of 2014, pending closing conditions. If all goes well, Corning and Samsung will also sign an agreement that will see them partner on LCD display glass supply through 2023. Further details on that deal were not disclosed.

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