“Selling Wolfspeed to Infineon speeds our transition to a more focused LED lighting company while providing significant resources to accelerate our growth,” said Chuck Swoboda, Cree chairman and CEO in a press release. “Divesting Wolfspeed is targeted to reduce short-term profits, but increase free cash flow. We believe this is the right decision for the company, as it unlocks value, increases management focus on the core business and supports our mission to build a more valuable LED lighting technology company. We target using the capital raised, combined with improved free cash flow, to fund select M&A, as well as to support additional stock buybacks.”
The business to be acquired by Infineon generated pro-forma revenue of $173 million in the last twelve months ending March 27, 2016. Both Cree’s board of directors and Infineon’s supervisory board have approved the transaction. The closing of the transaction is expected by the end of calendar year 2016, and is subject to customary closing conditions and regulatory approvals. Cree sees approximately $585 million of net proceeds after tax and other deal related costs.
In other news at Cree, its Commercial Lighting business gained momentum in Q4, as orders increased, customer service improved significantly and nine new products or significant upgrades were released. The release said LED Products also executed well, delivering solid quarter over quarter revenue growth. Preliminary revenue results for Q4 were at the upper end of the company’s target range at approximately $388 million. Lighting Products revenue was in line with the expectations for this segment in the Company’s previously announced revenue targets at approximately $197 million and the company’s LED Products revenue was higher than the expectations for this segment in the company’s previously announced revenue targets at approximately $160 million due in part to the benefit of licensing revenue.
