Cree terminates $850 million sale of its Wolfspeed business

LED lighting company Cree has pulled the plug on the sale of its Wolfspeed subsidiary.

The demise of the deal to sell the business for $850 million in cash to Europe’s largest semiconductor company, Germany-based Infineon, came as no surprise in light of last week’s announcement that the U.S. government had raised objections on grounds of national security.

Durham-based Cree said the two companies tried, but failed, to find a way to modify the deal in a way that would allay the concerns of the Committee on Foreign Investment in the U.S. The committee is an interagency group that reviews proposed sales to foreign entities to determine their impact on national security.

Cree initially planned to spin off Wolfspeed into a separate publicly traded company but instead ended up negotiating a deal with Infineon, which was announced in July. Cree CEO Chuck Swoboda said at the time that the proceeds of the sale would be used "to accelerate growth in our core lighting business."

Now, however, Cree has decided to hold onto Wolfspeed, which is based in Durham and has 550 employees. Wolfspeed’s power components are used in computer servers and uninterruptible power supplies and for solar energy. Its RF transistors and integrated circuits are used in radar and telecommunications systems.

“We are disappointed that the Wolfspeed sale to Infineon could not be completed,” Swoboda said in a prepared statement. “In light of this development, we are going to shift our focus back to growing the Wolfspeed business.”

Swoboda added that “the strength of our balance sheet and improving operating cash flow” will enable the company to invest in Wolfspeed while growing its LED and LED lighting businesses.

Cree also reported that it will receive a $12.5 million termination fee from Infineon.

The company declined further comment.

Cree produces LED light bulbs and indoor and outdoor LED lighting fixtures, as well as components other companies use in LED lights. Its LEDs are used to illuminate mobile phones, TVs, electronic signs and car dashboards.

This story was originally published February 16, 2017 at 5:38 PM with the headline "Cree terminates $850 million sale of its Wolfspeed business."