On March 15, CREE announced the implementation of a definitive agreement to sell its lighting products business unit (Cree Lighting) to IDEAL INDUSTRIES, INC., which includes LED lighting, lighting and lighting solutions for commercial, industrial and consumer applications.
The pre-tax price of the transaction is approximately US$310 million (approximately RMB2.08 billion) and Cree expects to receive an initial cash payment of US$225 million and is expected to receive approximately RMB 85 million within 12 months from the end of the transaction 2 years later. Earn-out payment for the dollar.
The transaction continues Cree's strategy announced in February 2018 to create a more focused and powerful semiconductor company that provides growth capital for Wolfspeed (its core power and RF business) and provides Cree with additional resources to expand its Semiconductor business. The transaction also enabled Cree Lighting to inject momentum into IDEAL for additional global attention, channel support and investment.
Gree CEO Gregg Lowe said: “Cree is aiming to be a leader in silicon carbide and GaN technology, and this goal has made significant progress in the past 18 months: Wolfspeed has grown more than 100% and acquired UK The RF power business of the company has more than doubled our manufacturing capacity of silicon carbide materials and signed a number of long-term supply agreements totaling more than $500 million. In addition to the divestiture of the lighting business today, Cree has become a more focused semiconductor. leader."
“Cree's technology is at the forefront of the automotive industry's transition to zero-emission electric vehicles, the telecom industry's move to faster 5G networks, and the continued growth of LED specialty applications. Our leadership in silicon carbide and gallium nitride enables us to take full advantage of it. These technologies provide tremendous advantages for our customers. The transaction provides a lot of resources to accelerate the growth of Wolfspeed, and the Cree Lighting business channel has been expanded and consolidated, which is a great opportunity for the business itself and employees. We believe this A decision is beneficial to the company and our employees, shareholders and customers because it unlocks value, increases the focus on core business management, and supports our mission to accelerate silicon carbide applications," Gregg Lowe said.
IDEAL is a growing global fourth-generation family business and a market leader in power control and management. Cree Lighting's product portfolio and SmartCast® technology complement IDEAL's advanced control business and suppliers, distributors, dealer channels and customer resources.
Jim James, Chairman and CEO of IDEAL, said: "Our comprehensive technology and expertise will continue to be based on Cree Lighting's leadership history and adapt to the advanced systems IDEAL has pioneered over the past 103 years. We will create a strong A community of innovation, channel strength and operational excellence. We are acquiring a very special business and we hope to continue to be successful, and we look forward to bringing Cree Lighting to its potential."
The transaction is expected to be completed in the fourth quarter of FY 2019 and will require regulatory approval and customary closing conditions.
In addition, Cree also announced its third quarter financial forecast for FY 2019.
Under the terms of the sale of Cree Lighting, this category will be classified as discontinued as of the third quarter of FY 2019. As a result, Cree is updating its business expectations to reflect only the ongoing business.
For the third quarter of the fiscal year ended March 31, 2019, Cree's continuing operating income was $2.71 to $277 million. Wolfspeed's revenue target is $1.39 to $141 million, while LED products have revenue targets of $1.32 to $136 million.
According to US GAAP, the gross profit margin target for continuing operations is approximately 35%; the gross profit margin target is approximately 36% for non-GAAP. According to US GAAP, the net loss from continuing operations is targeted at $900 to $14 million (or $0.09 to $0.14 per diluted share). According to non-GAAP, the revenue target for continuing operations is $1,400 to $18 million (or $0.14 to $0.18 per diluted share)