Cree Acquiring LED Maker Cotco for $200M

LED lighting maker Cree Inc. announced today it will acquire privately held Cotco Luminant Device Ltd. of Hong Kong for $200 million in a stock-and-cash transaction.

Cree said in a statement that acquiring Cotco, a supplier of high-brightness LEDs in China, will provide the company with access to the fast-growing solid-state lighting market in that country. It will also give Cree a low-cost manufacturing platform there and allow it to offer more products in key markets for high performance LED screens, signs and solid-state lighting.

Under the terms of the agreement, which has been approved by the board of directors of both Cotco's parent company, Cotco Holdings Ltd., and Cree, Cotco Holdings will receive $70 million in cash and 7.6 million shares of Cree stock valued at $130 million, based on the average price over the previous 20 trading days. If Cotco achieves certain financial targets over the next two fiscal years, Cree may pay as much as $125 million more in any combination of cash and stock.

Cree said it expects the acquisition to boost its 2008 earnings per share by five to 10 percent and increase annual revenue by 15 to 20 percent.

"This acquisition is the next step in our strategy to enable the solid-state lighting revolution," said Chuck Swoboda, Cree chairman and CEO. "We are excited about having the Cotco management team join the Cree family and continuing to build on their success. We look forward to working together to expand our business in China and to transform Cree into a truly global company."

As part of the agreement, Cotco Holdings agrees not sell or transfer any of the Cree stock it receives for one year after the closing date, when it will be free to sell up to half of its Cree shares. The restrictions on the other half of its Cree shares will be lifted two years after the closing. Also as part of the deal, a subsidiary of Cotco Holdings will sign a long-term supply agreement with Cotco to buy a certain number of LED lamp products on a quarterly basis.

The transaction, which is subject to customary closing conditions, is expected to close by late March or April. For more information, visit: www.cree.com