SMART Global Holdings to Purchase Cree LED Products Business

SMART Global Holdings Inc. entered into an agreement with Cree Inc. to purchase the Cree LED Products business. The acquisition is valued at up to $300 million.

SMART, a developer of electronics industry solutions for the memory, computing, and storage markets, will absorb CREE LED’s portfolio of LED chips and components. The addition will support SMART’s business expansion into specialty lighting solutions, said Mark Adams, president and CEO of SMART Global Holdings.

“This transaction uniquely positions Cree with a sharpened strategic focus to lead the industry transition from silicon to silicon carbide,” said Gregg Lowe, CEO of Cree.

Per terms of the agreement, 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.

The companies expect the transaction to close in the first calendar quarter of 2021. Following the close, SMART expects to license and incorporate the Cree LED brand and trademarks into the SMART portfolio of businesses.