DURHAM – It’s Wolfspeed and semiconductors or nothing at Cree, the Durham company disclosing early Monday that it is selling off its LED business for as much as $300 million.
Just over a year ago, Cree sold its LED [light emitting diode] lighting business for $310 million.
Investors apparently like the move. The news immediately triggered a 2.5% jump in Cree’s stock (Nasdaq: CREE) to $71.29 in pre-market trading. At one point later Monday shares climbed more than 5% to a new one-year high of $77.18, according to business news site Benzinga.
Shares did fall to under $74 in afternoon trading, however.
The sale of the LED manufacturing business to SMART Global Holdings is part of Cree CEO Gregg Lowe’s mission to remake Cree since taking over as its top executive three years ago and focus on its WolfSpeed power supply and semiconductor efforts.
What impact the sale will have on Cree’s employees working with LEDs, including those in the Triangle, is not yet clear.
Cree is in the midst of a $1 billion expansion of its business portfolio, including additional facilities in Durham and a new chip plant in New York.
In May of 2019 Cree closed on the sale of its lighting fixtures, lamps and corporate lighting business to IDEAl.
“We are pleased to announce the sale of our LED Products business to SMART, which represents another key milestone in our transformational journey to create a pure-play global semiconductor powerhouse,” Lowe said in Monday’s announcement.
“This transaction uniquely positions us with a sharpened strategic focus to lead the industry transition from silicon to silicon carbide and further strengthens our financial position, which will support continued investments to capitalize on multi-decade growth opportunities across EV, 5G and industrial applications. SMART has a strong platform and a solid track record of successfully acquiring and integrating technology businesses.”
SMART is based in California. Its stock trades on the Nasdaq under the symbol SGH.
The company definies itself as “a global leader in specialty solutions serving the electronics industry for over 30 years across the memory, computing, and storage markets.”
The deal includes a $50 million upfront payment at closing, a $125 million “seller” note issued to Cree by SMART that is due in August 2023 and an earn-out payment of $125 million based on LED gross profits across the first four quarters after the deal closes, the companies said in a joint statement.
Noted Mark Adams, CEO of SMART Global Holdings: “As the leader in LED lighting technology with a highly respected brand and expansive patent portfolio, Cree has a track record of delivering best-in-class solutions and I am very excited about the opportunities that lie ahead for Cree LED as part of the SMART portfolio of products.”
The LED products will continue to include the Cree brand name, the companies added.
Read the full announcement online.
