Asian Woes Cause AEA to Drop Bid for Corning Cookware Unit

Corning Inc. said Wednesday that AEA Investors Inc. has dropped its offer to buy Corning’s consumer housewares unit for $825 million, because of worries that economic turmoil in Asia will hurt the unit’s sales next year.

The move, which comes two months after Corning agreed to cut the price from $975 million, sets back Corning’s plans to shed the unit as it focuses on its faster-growing optical fiber business.

Corning said it has identified several other potential buyers and plans to sell the maker of Pyrex, Corning Ware and Revere Ware cookware by early next year. Analysts said Rubbermaid Inc. and Newell Co. are potential suitors and that Corning will probably have to settle for less than the unit’s $700 million in annual revenue.

“Obviously, they’re not going to get the price they were originally trying to get,� said William Gorman, an analyst at PNC Institutional Investments in Philadelphia. “I remember when they announced the deal, there were a lot of us who said this is too good to be true--and it was too good to be true.�

On Oct. 15, AEA and Corning agreed to a reduction in the sale price to $825 million from the $975 million first announced late in August.

Corning shares fell $2.38 to close at $39.94 on the New York Stock Exchange.

Officials of New York-based AEA could not be reached for comment. The investment group was founded by some of the richest families in the U.S., including the Rockefellers, Mellons and Harrimans. Investors in AEA also include top executives at a number of major corporations.

Corning said AEA backed out of the deal because it is concerned that economic turmoil in Asia will trim future growth in export sales.

“Frankly, we have not seen any impact from the Asian situation,� Corning spokesman Robert Demallie said, adding that Asia accounted for only about 10% of the unit’s sales, with South Korea the largest contributor.

“It was concern on AEA’s part about the prospect for growth in Asia in 1998 and beyond, not anything to do with the current business� there, that caused the deal to fall apart, he said. Corning also indicated “softness� in the U.S. housewares business in the fourth quarter, which Demallie attributed to fluctuations in retailer orders.