Cree Sharpens LED Lighting Focus with Deal to Sell Power & RF Unit

Cree has made no secret of its plans to focus its business on LED lighting. Now the company is ramping up those efforts with the planned sale of a legacy business unit that did not fit that strategy.

Durham, NC-based Cree (NASDAQ: CREE) announced today that it has a definitive agreement to sell its Power & Radio Frequency (RF) products unit to semiconductor company Infineon Technologies (FSE: IFX) for $850 million cash. The deal comes 14 months after Cree first announced it would spin off the business, which makes components for equipment used by the power and telecommunications industries. At the time, Cree said that the Power & RF division, renamed Wolfspeed, would be spun off via an initial public stock offering.

This morning, Cree revealed that after announcing those spinoff plans, several parties inquired about acquiring the business outright. After evaluating the offers, Cree said it concluded that selling Wolfspeed to Neubiberg, Germany-based Infineon was the best option.

Power & RF is the smallest of Cree’s three business units, accounting for $123.9 million of the company’s $1.6 billion in net revenue in fiscal 2015. The Lighting Products division generated $906.5 million in revenue; LED Products produced $602.1 million in revenue. Since launching its low-cost LED bulb for consumers in 2013, Cree has placed greater emphasis on LED bulbs and lighting systems sold to both businesses and consumers. In a prepared statement, Cree CEO Chuck Swoboda said the sale of the Power & RF division speeds up the company’s transition to becoming an LED lighting-focused business. Cree expects to net $585 million from the sale, after taxes and other costs. The company said it will funnel that money toward mergers and acquisitions, as well as stock buybacks.

The boards of directors of both Cree and Infineon have approved the deal, which is expected to close by the end of 2016.

Frank Vinluan is editor of Xconomy Raleigh-Durham, based in Research Triangle Park. You can reach him at fvinluan [at] xconomy.com Follow @frankvinluan

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