CREE stock was soaring today on news that Cree (NASDAQ:CREE) is selling its Lighting Products business unit.
The deal has Cree selling its Lighting Products business to Ideal Industries for up to $310 million. The deal starts off with an initial cash payment of $225 million for the business. If certain adjusted EBITDA targets are met during a 12-month period two years after the sale, Cree will get another $85 million.
This is good news for CREE stock as part of the company’s continuing efforts is to create a powerhouse semiconductor company with a stronger focus. The company’s plans to do this were first announced back in February 2018.
“With the addition of today’s lighting divestiture news, Cree is well positioned as a more focused semiconductor leader,” Gregg Lowe, CEO of Cree, said in a statement. “This transaction provides significant resources to help accelerate Wolfspeed’s growth while providing a terrific growth opportunity for the Lighting Business and its employees through an expanded channel that strengthens its market position.”
Cree also notes that it is updating its outlook for its fiscal third quarter of 2019 due to the deal. It is now expecting earnings per share between 14 cents and 18 cents with revenue from continuing operations ranging from $271 million to $277 million. Wall Street is looking for earnings per share of 17 cents on revenue of $396.48 million for the period.
Cree says that it is planning to complete the deal with Ideal Industries during the fourth quarter of fiscal 2019.
CREE stock was up 6% as of Friday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.
