Corning Incorporated GLW recently announced that it has agreed to take over Gerresheimer AG’s pharmaceutical glass tubing business for 196 million euros.
The acquisition is expected to be completed by the end of 2015, subject to customary closing conditions, including regulatory approvals.
Based in Dusseldorf, Germany, Gerresheimer manufactures glass tubes and plastic packaging products mainly for its own plants. These are used for making ampoules, vials, cartridges and glass syringes used in pharmaceutical and health care industries.
Per the 10-year deal, Corning will supply glass tubing to Gerresheimer. The companies will also form a joint venture to focus on new technologies for the pharmaceutical glass packaging market. While Corning will own 75% of the venture, the remaining 25% will be owned by Gerresheimer.
Post acquisition, Corning will assume the ownership of Gerresheimer’s tubing plants in Vineland (New Jersey) and Pisa (Italy). Currently, Gerresheimer’s tubing business enjoys a strong position in the global pharmaceutical tubing market and garnered revenues worth 83 million euros in 2014.
This acquisition will strengthen Corning’s position as a leading provider of glass substrates for the pharmaceutical glass packaging market. Gerresheimer’s expertise in packaging solutions combined with Corning’s global infrastructure and competency in materials science will enable the latter to launch the best glass materials used in the pharmaceutical glass packaging market.
Considering the growth witnessed by the pharmaceutical market over the last few years, this deal will boost Corning’s Life Science revenues and increase its overall market share. In the recently reported first-quarter results, the segment contributed 8% to total revenue, down 8.4% sequentially and 6.2% year over year.
Corning is a worldwide provider of connectivity solutions. The company has been supplementing its portfolio with various acquisitions. In Apr 2015, Corning acquired Canada-based iBwave, a provider of design-software for in-building wireless solutions, to expand its in-building wireless portfolio. In January, it took over California-based TR Manufacturing, a provider of fiber-optic and copper cable/component interconnects and electro-mechanical assemblies to original equipment manufacturers, further expanding its optical business.
In the first quarter, the company reported strong core earnings of 35 cents, ahead of the Zacks Consensus Estimate of 33 cents. However, revenues of $2.23 billion dropped 5.8% sequentially and 1% year over year due to weakness in the Display and Life Sciences segments.
Corning currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are KVH Industries Inc. KVHI, SeaChange International, Inc. SEAC and Arista Networks, Inc. ANET. KVH Industries and SeaChange International sport a Zacks Rank #1 (Strong Buy), while Arista carries a Zacks Rank #2 (Buy).
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