Cree (Nasdaq: CREE) plans to split into two companies, disclosing plans Monday to spin off its profitable power and radio frequency chip business through a stock offering. A familiar face in Triangle tech will be leading it.

The new group is to be called the Cree Power & RF Division.

Cree shares immediately rose 4 percent in early Wall Street trading from Friday’s close of $29.75.

The move will help current Cree management to focus on its LED business while at the same time generating capital for the power and RF subsidiary, the company says. LED bulbs and lighting fixtures have become an increasingly important part of the Cree business and has helped trigger a global expansion of the firm over the past several years.

In an SEC filing, Cree also disclosed that it had already hired an executive who would serve as CEO of the spun-off group.


  • WTW Insider: A look at what Cree is spinning off – a very profitable group.

He’s Frank Plastina, a Triangle technology veteran who once led Tekelec. That firm is now owned by Oracle. Plastina also is a former Nortel executive and is an active angel investor in Triangle startup companies.

The power and RF units of Cree are small but profitable.

According to Cree’s annual report for 2014, the power and RF group produced 6 percent of the firm’s $1.6 billion in revenues, or some $107.5 million.

However, its profits were $60.7 million, a gross margin of 56 percent.

“It is expected that Mr. Plastina will serve as Chief Executive Officer of Cree Power & RF Division, Inc. upon the completion of its previously announced initial public offering,” Cree said in the filing.

He is expected to be in that job by June 8, the company added.


Who is Frank Plastina?

Cree provided this bio of Plastina with its SEC filing:

Mr. Plastina, 52, is presently a member of the Company’s Board of Directors, on which he has served since December 2007, and a member of the Company’s Governance and Nominations Committee and Chairman of the Company’s Audit Committee. Since May 2012, he has served as President and Founder of Arc & Company, LLC, an advisory and angel investment firm. He has also served as an Entrepreneur-in-Residence with the Blackstone Entrepreneurs Network in Research Triangle Park, North Carolina since October 2011. From February 2006 until January 2011 he served as President and Chief Executive Officer, and as a board member, of Tekelec, Inc., a publicly traded provider of telecommunications network systems and software applications. From September 2005 through February 2006, Mr. Plastina served as Executive in Residence at Warburg Pincus LLC, a private equity firm, where he was responsible for evaluating potential investments and providing executive support to portfolio companies. From 2003 to 2005, he held various executive positions with Proxim Corporation, a provider of WiFi and broadband wireless access products, including Executive Chairman, President and Chief Executive Officer. From 1987 until 2002, Mr. Plastina served in a series of management and executive positions with Nortel Networks Corporation, a multi-national telecommunications equipment provider.


Plastina is a member of Cree’s board and has been since 2007.

However, once the IPO is completed, “Cree intends to remain the majority stockholder of the subsidiary post offering,” the company said.

Cree employs some 2,300 people in the Triangle and more than 7,000 worldwide.

The Durham-based company, which launched in 1987 around a core of N.C. State University students, is led by chair and CEO Chuck Swoboda.

Cree announced its plans early Monday before the markets opened.

Here’s how Cree describes its power and RF business:

“The company’s Power and RF Products segment provides SiC-based power products, such as Schottky diodes, SiC metal semiconductor field-effect transistors, and SiC power modules that are used in power supplies in computer servers, solar inverters, uninterruptible and industrial power supplies, and other applications; and RF devices, including a range of GaN high electron mobility transistors (HEMTs) and monolithic microwave integrated circuits (MMICs) for military, telecom, and other commercial applications, as well as provides foundry services for GaN HEMTs and MMICs that allow customers to design their own custom RF circuits.”

Cree currently focuses on:

  • LED bulbs
  • LED lighting
  • LED components
  • Chips and materials
  • Power solutions
  • Radio frequency components

The full announcement follows:

Cree Announces Confidential Submission of Draft Registration Statement for Initial Public Offering of Power and RF Business

DURHAM, NC — Cree, Inc. (Nasdaq: CREE) today announced that Cree’s wholly owned Power and RF subsidiary has submitted a draft registration statement on a confidential basis to the U.S. Securities and Exchange Commission for a potential initial public offering of the subsidiary’s Class A common stock.

The type and number of shares of stock to be sold and the price range for the proposed initial public offering has not yet been determined, although Cree intends to remain the majority stockholder of the subsidiary post offering. The initial public offering is expected to commence after the Securities and Exchange Commission completes its review process, subject to market and other conditions. The Power and RF subsidiary is raising capital to invest directly in the business to support targeted future growth.

The offering would enable Cree management to focus on Cree’s LED and Lighting businesses, while also creating a dedicated focus on the Power and RF business. The company believes that this transaction should allow Cree shareholders to better realize the full value of both businesses.

This announcement is being made pursuant to and in accordance with Rule 135 under the Securities Act of 1933. As required by Rule 135, this press release does not constitute an offer to sell or the solicitation of an offer to buy securities, and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause actual results to differ materially from those indicated. Actual results may differ materially due to a number of factors, including but not limited to, market conditions, our subsidiary’s ability to complete the potential initial public offering, the clearance by the relevant regulators of the filings of our subsidiary relating to the proposed initial public offering, and the timing thereof, and the other risks set forth in our subsidiary’s filings with the U.S. Securities and Exchange Commission. These forward-looking statements represent Cree’s judgment as of the date of this release. Except as required under the U.S. federal securities laws and the rules and regulations of the U.S. Securities and Exchange Commission, Cree disclaims any intent or obligation to update any forward-looking statements after the date of this release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.