DURHAM, N.C. & NEWARK, Calif., Oct. 19, 2020 – SMART Global Holdings, Inc. (Nasdaq: SGH) today announced that it has entered into a definitive agreement with Cree, Inc. (Nasdaq: CREE) to purchase the Cree LED Products business unit (“Cree LED”) for up to $300 million, including fixed upfront and deferred payments and contingent consideration.
SMART is a global leader in specialty solutions serving the electronics industry for over 30 years across the memory, computing, and storage markets. Cree LED comprises a broad portfolio of highly efficient LED chips and high-performance LED components and represents one of the strongest global brands in the LED business. Leveraging SMART’s comprehensive global platform and proven operational excellence, Cree LED will be well positioned to continue to deliver industry-leading LED products and solutions.
“As a leader in LED technology with a highly respected brand and expansive patent portfolio, Cree LED has a track record of delivering best-in-class solutions through well-established distribution and sales channels,” said Mark Adams, President & CEO of SMART Global Holdings. “The addition of Cree LED significantly advances our growth and diversification strategy. We see a meaningful opportunity to expand our business into specialty lighting and continue to drive value for our customers, employees, and shareholders. We are excited about this transformational transaction and look forward to welcoming the Cree LED team to the SMART family.”
“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,” said Cree CEO Gregg Lowe. “This transaction uniquely positions Cree with a sharpened strategic focus to lead the industry transition from silicon to silicon carbide. SMART has a strong platform and a solid track record of successfully acquiring and integrating businesses with a focus on specialty solutions.”
Mr. Adams continued, “We see meaningful upside opportunity at Cree LED as we leverage SMART’s proven operating system and believe that with renewed focus, strong operating discipline, transformative manufacturing expertise, and synergistic cost benefits, we will deliver significant shareholder value.”
Under the terms of the agreement, which has been approved by the boards of directors of both companies, SMART will make an initial cash payment of $50 million upon closing and an additional $125 million in a seller-financed note payable interest only until a balloon payment due in August 2023. Cree has the potential to receive an earn-out payment of up to $125 million based on the revenue and gross profit performance of Cree LED in the first full four quarters post-transaction close, payable in the form of a three-year seller note. The transaction is subject to required regulatory approvals and satisfaction of customary closing conditions. The seller-financed notes will accrue interest at an annual rate of LIBOR plus 3% payable quarterly.
Following the close of the transaction, which is expected to occur in the first calendar quarter of 2021, SMART expects to license and incorporate the Cree LED brand and trademarks into the SMART portfolio of businesses.
About SMART Global Holdings
The SMART lines of business are leading designers and manufacturers of electronic products focused on memory, computing and storage technology areas. SMART specializes in application specific product development and support for customers in enterprise, government and OEM sales channels. Customers rely on SMART as a strategic supplier with top tier customer service, product quality, and technical support with engineering, sales, manufacturing, supply chain and logistics capabilities worldwide. SMART targets customers in markets such as communications, storage, networking, mobile, industrial automation, industrial internet of things, government, military, edge computing and high performance computing. SMART operates in three primary product areas: Specialty Memory products, Brazil products and Specialty Compute and Storage Solutions. For more information about SMART Global Holdings business units, please refer to www.smartm.com.
About CREE Inc.
Cree is an innovator of Wolfspeed® power and radio frequency (RF) semiconductors and lighting class LEDs. Cree’s Wolfspeed product families include silicon carbide materials, power-switching devices and RF devices targeted for applications such as electric vehicles, fast charging inverters, power supplies, telecom and military and aerospace. Cree’s LED product families include blue and green LED chips, high-brightness LEDs and lighting-class power LEDs targeted for indoor and outdoor lighting, video displays, transportation and specialty lighting applications. For additional product and Company information, please refer to www.cree.com.
"Forward-Looking" Statements are omitted