NEW YORK (CNN/Money) - Diversified manufacturer 3M Co. is buying a unit of struggling fiber optic maker Corning Inc. for $850 million.

The unit, Corning Precision Lens Inc., is the largest worldwide maker of lens systems for rear projection televisions. It has 1,500 employees and had 2002 sales of $260 million, which represented about 4 percent of Corning's overall sales. It announced plans in September to expand into China.

3M's statement said it believes the business represents a multibillion-dollar growth opportunity, with an expected 35 percent compound annual growth rate through 2006. 3M said the business will be a good complement to its strong optical film capabilities that are used by the emerging consumer liquid crystal display (LCD) television market.

Corning will use the proceeds of the sale to reduce debt, make payments to its pension fund and increase its cash balance. The company ended the third quarter with $4.2 billion in long-term debt on the books and cash and short-term investments of only $1.6 billion.

"The sale of Corning Precision Lens is part of an overall plan to improve our financial health as we focus on returning to profitability," said a statement from Corning Chief Financial Officer Jim Flaws.

While Corning has been closing and consolidating plants, particularly in its fiber optic operations, in an effort to stem losses, this is the first divestiture of an operation in four years.

Shares of 3M (MMM: Research, Estimates), a component of the Dow Jones industrial average, lost $1.93 to $126.36 in Monday trading, while shares of Corning (GLW: Research, Estimates) lost 24 cents, or 10 percent, to $2.16.