Cree (NASDAQ:CREE) is in the news Monday after announcing plans to sell its LED unit to Smart Global Holdings (NASDAQ:SGH) for as much as $300 million.
A Cree news release reveals that the company is swelling its LED unit for an upfront price of $50 million. To go along with this, it gets $125 million from the maturity of a seller note from Smart Global Holdings in August 2023. The company also has the option of receiving another $125 million from SGH based on the performance of Cree LED in the first full year after the sale.
Here’s what Cree CEO Gregg Lowe has to say about the news.
“We are pleased to announce the sale of our LED Products business to SMART, which represents another key milestone in our transformational journey to create a pure-play global semiconductor powerhouse. This transaction uniquely positions us with a sharpened strategic focus to lead the industry transition from silicon to silicon carbide and further strengthens our financial position, which will support continued investments to capitalize on multi-decade growth opportunities across EV, 5G and industrial applications.”
Cree’s transaction with Smart Global Holdings has it getting legal advice from Smith Anderson. The company’s financial advice for the deal comes from Morgan Stanley.
Cree notes that the deal still needs approval from regulators before it can move forward. So long as there are no issues, the two companies expect the sale to close in the first quarter of 2021.
CREE stock was up 6.4% and SGH stock was up 6% as of Monday morning.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.