Cree, Inc., Durham, NC, announced that it will terminate the definitive agreement it struck to sell its Wolfspeed Power and RF division to Infineon Technologies AG of Munich, Germany. The intended sale, which includes Cree’s silicon carbide substrate business for power, RF and gemstone applications, ran aground on national security concerns from the Committee on Foreign Investment in the United States (CFIUS), and Cree and Infineon were unable to identify alternatives which would address those concerns. As a result, the proposed transaction will be terminated, Cree said in a release.
“We are disappointed that the Wolfspeed sale to Infineon could not be completed,” Chuck Swoboda, Cree chairman and CEO, said in the release. “In light of this development, we are going to shift our focus back to growing the Wolfspeed business. The Wolfspeed business has performed well this year as our customers have further realized the value of our unique technology and is on a great path as a part of Cree. The strength of our balance sheet and improving operating cash flow gives us the ability to invest in Wolfspeed, while continuing to pursue our LED and Lighting growth plans. We believe investing to grow all three businesses will create the most value for our shareholders.”
The termination of the transaction with Infineon will trigger a termination fee of $12.5 million being paid to Cree. As a result of the transaction termination and Cree’s decision to focus on running the Wolfspeed business, Wolfspeed will now be reported as a separate segment of Cree’s continuing operations.
Cree had rolled-together and rebranded its power and RF division as Wolfspeed in Sept. 2015 in anticipation of an initial public offering (IPO) spin-off or sale of the group. The deal with Infineon was announced in July 2016. The move to divest Wolfspeed was part of a move to refocus Cree on LED lighting and gather some funds to further expand its lighting business.
“Selling Wolfspeed to Infineon speeds our transition to a more focused LED lighting company while providing significant resources to accelerate our growth,” said Chuck Swoboda, Cree chairman and CEO, said when the deal with Infineon was announced. He added then that the capital raised by the sale would fund mergers and acquisitions and some stock buy-backs.