Cree, an LED lighting, semiconductor and other lighting products developer is planning to sell ("Cree Lighting")- its lighting products sector. Lighting for businesses and LED lighting fixtures are all included within the business unit. Ideal Industries is going to acquire it for roughly $310 million (before taxes). The deal is scheduled to be completed in Q4 of 2019.
Cree is first expecting a cash payment of $225 million, which could change due to fluctuations in price, with the potential of around $85 million. This is based on an EBITDA metric during a 12-month period for Cree Lighting. After the transaction is finalized, it will begin for two years.
Cree's Focus on Semiconductor Manufacturing: This transaction moves Cree closer to its goal of focusing mainly on being a semiconductor manufacturer. The company announced in February 2018 that it wanted to become a leading company when it comes to producing semiconductors. This is going to provide growth capital for Wolfspeed (one of their core businesses) and additional resources to better expand their semiconductor operations. Cree Lighting will also have the potential to gain global focus as they strengthen their relationship with the Ideal team.
Greg Lowe, the CEO of Cree, said that their company is innovative when it comes to shaking up the industry. They have helped push automakers to produce electric cars, made the use of LEDs a no-brainer, and made the adaptation of the new 5G networks happen faster. Cree is a company that is focused on the future and has innovation strongly in mind.
Ideal on Purchasing Cree's LED Lighting Business: Ideal Industries is a family-owned, fourth-generation company that is growing globally. They operate in controlling electric power and its management. Ideal has a business that is very advanced in control and is complementary to Cree's business portfolio.
The CEO of Ideal, Jim James, stated that the combined knowledge and technology will further add on to Cree's record of leadership. The acquisition also aligns with Ideal's advanced systems, which they have pioneered for the past 103 years. James stated that the two companies will "create a powerful combination of channel strength, innovation and operational excellence." He is looking forward to help Cree Lighting further realize its potential in the industry throughout the future.
Business Update: FY19, Q3: As of FY19, the selling of Cree's lighting business will be labeled as discontinued operations. For Cree's third quarter of the 2019 fiscal year, which ended on March 31, 2019, it said that it is targeting their revenue at about $274 million.