Corning to Boost Life Sciences Portfolio - Analyst Blog
13 Aprile 2012 - 3:00PM
Zacks
Corning Inc. (GLW) announced that it has entered into an
agreement with Becton, Dickinson & Co. (BDX) to buy a major
portion of its Discovery Labware unit for about $730 million in
cash. The acquisition is expected to be completed later this year,
depending on certain customary closing conditions, including
receipt of regulatory approvals.
The Discovery Labware unit has operations in Massachusetts,
North Carolina, and the United Kingdom, and boasts of extensive
dealer networks in Asia, Europeand North America.
Upon the closing of the acquisition, Corning will integrate four
of the Discovery Labware unit's main product platforms into
Corning's Life Sciences segment. These product platforms include
plastic consumable labware, liquid-handling products, cell-based
assays and cell cultureware, as well as ADME research.
The company said that the acquisition will enhance Corning’s
broad portfolio of life sciences products and expand its annual
revenues by 40%. In the fourth quarter, Corning’s Life Sciences
business accounted for around 8% of revenue, which was down 6.5%
sequentially but up 2.1% from a year ago.
The deal will help Corningto expand its global market share and
benefit from the Discovery Labware unit's extensive product
portfolio and established dealer network. In December last year,
Corning acquired Mediatech, which was also integrated into
Corning's Life Sciences segment to augment its sales.
Corning’s innovations, technologies and acquisitions help it to
deliver improved results and maintain its position in an
increasingly competitive market. Corning delivered a decent fourth
quarter, beating the Zacks Consensus Estimates by 8 cents or 26.5%.
Corning is set to report its first quarter 2012 earnings on April
27, and expects the Life Sciences business to be up 10%
sequentially.
Corning does not expect the acquisition to have any impact on
its 2012 financials, but believes that the transaction will be
slightly accretive in 2013. Additionally, the company stated that
the acquisition will aid in achieving its $10 billion revenue
target in the next few years.
However, Corning faces significant competition due to market
saturation, pricing pressure and product launches. For its hardware
and equipment products, the company faces stiff competition from
the likes of 3M Company (MMM), Tyco Electronics, Ltd. (TEL),
Furukawa OFS, CommScope and ADC Communications.
Corning shares currently carry a Zacks #4 Rank, which translates
into a Sell rating for the short term (1–3 months).
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