LED Lighting Fixtures has boasted that it is “light reinvented.” If so, the company and its technology will do so in the future as part of Cree.

“This is a bold step forward in leading the LED lighting revolution,” Cree Chairman and Chief Executive Officer Chuck Swoboda told analysts in a conference call Friday morning, the enthusiasm evident in his voice.

Friday before U.S. stock markets opened, Cree (Nasdaq: CREE) said it would buy the two-year-old startup in a deal worth as much as $103 million in cash, stock and incentives. The news led to a slight increase in Cree stock – 42 cents, or 1.3 percent. Shares closed at $32.22.

Executives at both firms certainly were not strangers to each other – or the technologies and products involved.

Several co-founders of Cree, including longtime chairman and CEO Neal Hunter, launched LLF. The founders – students at North Carolina State University – set up Cree in 1987.A key part of the deal is that those executives stay on board with $26.4 million of the deal based on key employee retention as well as product development and sales goals.

Hunter Cites Cree’s ‘Passion’

Swoboda made no reference to Hunter or LLF’s management in the call, but he crowed that LLF had developed a “breakthrough product.” He added that LED products will “obsolete the light bulb.”

However, Cree obviously feels there is a need to retain LLF management. Hunter will remain head of the LLF division at Cree – to be called Cree LED Lighting Solutions. And he will report to Swoboda, whom he recruited to run Cree before he stepped down to move into other ventures, such as real estate and LLF.

Hunter did not participate in the call. In a statement included in the acquisition announcement, Hunter did say Cree “is as passionate as we are about moving the lighting market forward and making an impact on energy consumption into the next decade and beyond. This acquisition should make Cree a powerful force for innovation around cutting-edge LED lighting solutions that are unmatched in the industry.”

Built around its core of former Cree executives, LLF developed quickly. In addition to raising more than $16 million in investment capital, LLF created products and began selling them in about 18 months. Within weeks of launch, LLF said it sold $1 million of LED-based light fixtures.

On a parallel track, Swoboda-led Cree embraced the possibilities of LED lighting, acquiring a Taiwan-based company for LED sales in China. Cree has also pioneered an “LED City” project, working with Raleigh, Ann Arbor, Mich., and Austin, Texas, to replace streetlight and parking garage lighting and other light devices with LED-based fixtures.

LLF Fixtures in Swoboda’s Home

By scooping up privately held LLF, as the company’s acronym reads, Cree is making a major investment in a growing demand for alternative lighting sources. Cree believes its XLamp model light emitting diodes, which basically are semiconductor chips designed to emit light, will be a key component in new lighting sources.

LLF has developed proprietary and patented technology for making LED light warmer, more colorful and more efficient. LEDs are being positioned as more power efficient, cooler and longer lasting that fluorescent or other blubs. And LLF has been buying LEDs from Cree.

In the conference call, Swoboda stressed that a key advantage in LLF’s products is their potential as replacements for replacements of fixtures “numbering into the billions” worldwide.

“The timing of this acquisition is right,” he said because of global demands for more energy efficient lighting. He cited the fact that many of LLF’s customers were small businesses, such as restaurants and offices, to home builders seeking alternative lighting.

“I recently had these installed in my own house,” Swoboda added.

A “Pull” for LEDs?

The revenue rewards could be great if Cree has indeed captured a sea change in lighting.

“The LED lighting revolution,” to use his words, is “probably $20 billion to $50 billion.” If that much demand materializes, Swoboda pointed out, Cree benefits in light fixture sales as well as creating a “pull” for LEDs.

Cree also will not be competing directly with some of its customers who also play in the LED lighting space, he added. Cree intends to target “the retrofit market” for fixtures and thus “attack in parallel” markets targeted by their customers for new fixtures.

LLF has some 40 employees. By becoming part of Cree, the LLF unit will acquire “a global footprint” as developed already by Cree, Swoboda added.

“Cree really wants to drive the LED market,” he explained. “LLF really gives us a chance to address the lighting market and create more pull through.”