Corning Ends Talks to Buy Nortel Unit

Corning Inc., the biggest maker of glass for optical networks, said it ended talks to buy a unit of Nortel Networks Corp. over concern that the proposed $100-billion transaction would hurt sales.

The companies discussed a plan to have Nortel sell its business that makes components used in fiber-optic equipment in exchange for a majority stake in Corning, people familiar with the matter said earlier this week. Corning has a smaller unit in the same industry.

“We never got to a point where we resolved exactly the valuation of their business nor what the appropriate valuation was to put on us,” said Corning Chief Financial Officer Jim Flaws, adding that Corning was valuing the Nortel unit “in the neighborhood” of $100 billion.

Corning has a market value of about $69 billion. Its shares fell $9.38 to close at $248.75 on the New York Stock Exchange.

The combination would have let Nortel, the biggest maker of fiber-optic equipment, create a rival supplier to JDS Uniphase Corp. in a market that will grow to $23.1 billion by 2003 from $6.7 billion last year, according to researcher Ryan Hankin Kent Inc.

Nortel Chief Executive John Roth said Tuesday he was concerned that so many suppliers of fiber-optic components are being acquired. JDS Uniphase has made 10 acquisitions in the last year and unveiled plans to buy rival SDL Inc. this month in a stock transaction now valued at $46.7 billion.

Flaws said Corning was concerned that if Nortel had a majority stake, it could lose current or potential sales to rivals of Nortel, which is North America’s No. 2 maker of phone equipment after Lucent Technologies Inc.

Nortel shares fell $5.50 to close at $78.50 on the New York Stock Exchange. They’ve more than tripled in the past year.