Cree pays $525 million for lighting company

STAFF WRITERAugust 17, 2011 

— LED lighting company Cree has bolstered its product lineup with a major acquisition valued at $525 million.

The purchase of privately held Ruud Lighting, which is based in Racine, Wisc. and has 800 employees, gives Cree a line-up of outdoor LED lighting fixtures to complement its own indoor lights, Cree CEO Chuck Swoboda said in an interview after the deal was announced late this afternoon.

"We want to accelerate the adoption of LED lighting, and we can do that by creating a market leader for both indoor and outdoor products," Swoboda said.

Boosting the overall market for LED lights reverberates throughout Cree's product line-up. In addition to its making its own LED light fixtures, Durham produces components that other companies use in their lighting products. Indeed, Ruud's BetaLED brand streetlights use Cree XLamp LEDs.

The LED lighting market has been growing fast but still comprises just 4 percent or 5 percent of the overall lighting market. However, Swoboda said that Ruud, which was founded in 1982, has been in the vanguard of what he likes to call "the LED revolution" and gets the majority of its revenue from LED lights. Ruud's annual revenue wasn't disclosed.

'They are one of the first companies that we are aware of that has really transitioned from traditional lighting to being an LED company," Swoboda said.

The City of Los Angeles is planning to install 128,000 BetaLED streetlights over four years, according to Cree.

Swoboda said no layoffs are planned as a result of the acquistion and that Ruud will remain in Wisconsin, where it will operate as a subsidiary of Cree's lighting business. Ruud's president, Christopher Ruud, will head the new subsidiary and his management team will remain in place. Ruud will report to Ty Mitchell, who heads Cree's lighting business.

Ruud's founder, chairman and CEO, Alan Ruud, is joining Cree's board and will take on a high-level role "driving strategy." He will report directly to Swoboda.

The acquisition cost has a net value of $525 million. The deal includes $372 million in cash and $211 million in stock, plus paying off $85 million in debt. However, the acquisition also was structured with the federal tax code in mind, with those expenditures offset by $143 million in tax benefits that will be spread out over a number of years.

Cree, which has more than 2,000 workers in Durham, has more than 5,800 employees worldwide after the acquistion.

The deal was announced after the markets closed. Earlier, Cree shares closed at $34.74, down $1.46. The company's shares have fallen 47 percent this year. or (919) 829-4877

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