Today, Cree, Inc. announced the execution of a definitive agreement to sell its Lighting Products business unit (Cree Lighting), which includes the LED luminaires, lamps, and corporate lighting solutions business for commercial, industrial and consumer applications, to IDEAL INDUSTRIES, INC. for approximately $310 million before tax impacts, including up-front and contingent consideration and the assumption of certain liabilities. Cree expects to receive an initial cash payment of $225 million, subject to purchase price adjustments, and has the potential to receive a targeted earn-out payment of approximately $85 million based on an adjusted EBITDA metric for Cree Lighting over a 12-month period beginning two years after the transaction closes.
The agreement continues Cree’s strategy, announced in February 2018, to create a more focused semiconductor company, providing growth capital for Wolfspeed, its core Power and RF business, and equips Cree with additional resources to expand its semiconductor operations.
IDEAL is a fourth-generation, family-owned, growing global company, focused on the electric power control and management market. Cree Lighting’s portfolio and SmartCast Technology are complementary to IDEAL’s advanced control business and channel of suppliers, distributors, agents, and customer relationships.
The closing of the transaction is anticipated to occur in the fourth quarter of fiscal 2019, and is subject to receipt of required regulatory approvals and satisfaction of customary closing conditions.