Cree is selling its power and radio frequency division to Infineon Technologies for $850 million in cash. Cree had intended to spin off the group known as Wolfspeed as a separate company.
The deal was announced early Thursday.
Cree plans to sell a huge RTP building as part of the deal, and its top executive says the transaction will enable Cree to focus more on its LED business – what Chair and CEO Chuck Swoboda called “Cree 3.0.”
Most of the 600 Wolfspeed workers are expected to keep their jobs, according to an SEC filing from Cree about the deal.
Wolfspeed’s name is linked to its founding by former students at N.C. State.
Infineon is a global semiconductor firm based in Germany and is the largest in Europe based on revenue, according to Bloomberg news.
Cree announced plans to spin off the venture in September of last year and hired Frank Plastina, a member of its board, to run the group.
However, in January, Cree pulled back on the spin-off plans.
Cree says the sale of the Durham-based group will allow it to focus on its LED business.
“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 statement.
“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.”
Background: What is Wolfspeed?
“Wolfspeed” is in part a tribute to research dating back to the N.C. State days of Durham-based Cree, is the name for the semiconductor and radio frequency business the company plans to spin off as a separate venture in coming months. One of Cree’s founders is part of the new group which will be led by Triangle veteran tech executive Frank Plastina.
And its tech will be used in the new Air Force F-35 fighter.
Wolfspeed power modules will be integrated into the cutting-edge fighter, and Plastina noted” “It’s a very interesting piece of technology. To meet the Air Force requirements is indicative of the work we are doing and will do going forward.”
John Palmour ischief technology officer of Wolfspeed. Palmour, who has focused on semiconductors and RF technology, was among the original group of students at NCSU who formed the company in 1987.
Read more at
https://wraltechwire.com/cree-names-spinoff-of-chip-radio-frequency-business-wolfspeed-/14870624/#6I85buGJ6yyy8Qcc.99
Infineon plans to utilize Wolfspeed technology as part of a drive to expand its Internet of Things and related business.
“With the deal, Infineon is trying to become stronger in power semiconductors as more devices from cars to refrigerators become connected via wireless networks,” Bloomberg reported.
“The purchase is part of Chief Executive Officer Reinhard Ploss’s bet on trends such as energy efficiency, connectivity and mobility, including autonomous-driving technology.”
Cree noted that when plans were announced for the spin-off that it “was approached by several parties interested in acquiring the business directly.” The decision was then made that a sale was the best move and that “selling Wolfspeed to Infineon is the best decision for our shareholders, employees and customers.”
Boards of both companies have already approved the deal.
Cree (Nasdaq: CREE) expects to net some $585 million from the deal.
If regulatory approve is secured, the deal is expected to close later this year.
