Cree Inc. (Nasdaq: CREE) has reached a deal to acquire the gallium nitride (GaN) substrate and epitaxy business of Advanced Technology Materials Inc., a wholly owned subsidiary of Danbury, CT-based ATMI Inc.

Under the terms of the agreement, Cree will purchase the assets of the business, including related intellectual property (IP), fixed assets and inventory, in exchange for cash. The amount was not disclosed.

The parties anticipate that the acquisition, which is subject to certain third party approvals and other customary conditions, will close during the fourth quarter of Cree’s fiscal year ending in June. It is not expected to have a material effect on Cree’s earnings per share.

“We believe ATMI’s GaN substrate and epitaxy capability will complement Cree’s existing silicon carbide and GaN materials business,” said Chuck Swoboda, CEO and president of Cree. “In addition, this acquisition provides Cree with fundamental IP related to GaN substrates and epitaxy technology which is synergistic with our existing patent portfolio in the optoelectronic, materials and microwave areas.”

ATMI, which supplies materials and materials packaging to semiconductor manufacturers, had planned to dispose of the unit it sold to Cree as part of a larger reorganization of the business.

“The sale of our gallium nitride business is the first element of the planned disposition of ATMI’s six technologies businesses,” said Gene Banucci, CEO of ATMI. “We feel very good about the results of this process for several reasons. It’s a good deal for ATMI strategically, and it’s probably an even better deal for Cree.

“As importantly, the employees of our gallium nitride business believed that Cree would be a great home for the business, and we are gratified that we were able to make this a reality.”

Based in Durham, Cree is an advanced semiconductor company that uses GaN, silicon carbide and other silicon materials to make products like blue, green and near ultraviolet (UV) light emitting diodes (LEDs), near UV lasers, radio frequency and microwave devices, and power switching devices. Applications for these products include solid state illumination, optical storage, wireless infrastructure and power switching.

Shares of CREE, which trade on the Nasdaq market, were up almost 2 percent, or some 40 cents, to near $21 on Thursday. Volume of less than 500,000 was one quarter that of the average 2 million shares exchanged daily.