17 February 2017
Cree terminates sale of Wolfspeed to Infineon following CFIUS' national security concerns
LED chip, lamp and lighting fixture maker Cree Inc of Durham, NC, USA is terminating last July's agreement to sell its Wolfspeed Power & RF division - which includes the silicon carbide (SiC) substrate business for power, RF and gemstone applications - to Infineon Technologies AG of Munich, Germany for $850m in cash (about €740m).
Based in Research Triangle Park, NC, USA and part of Cree for almost three decades, Wolfspeed is a provider of SiC-based power and GaN-on-SiC-based RF power solutions. With more than 550 staff and an IP portfolio of about 2000 patents and patent applications, the acquisition would have complemented Infineon's previous acquisition of International Rectifier in early 2015, while the SiC-based product portfolio would have added to Infineon's existing range.
However, on 8 February, based on communications with the Committee on Foreign Investment in the United States (CFIUS), Cree and Infineon said that the transaction in its existing form was unlikely to be approved by CFIUS, and that they were therefore exploring ways of modifying the transaction in order to mitigate or address the regulatory concerns (then refiling with CFIUS). Cree and Infineon now say that they have been unable to identify alternatives that would address the national security concerns of CFIUS.
"In light of this development, we are going to shift our focus back to growing the Wolfspeed business," says Cree's chairman & CEO Chuck Swoboda. "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," he adds. "I thank [Infineon CEO] Dr Ploss and the rest of the Infineon team for the significant amount of time and commitment they invested trying to successfully complete the transaction," continues Swoboda.
The termination of the transaction with Infineon will trigger a termination fee of $12.5m being paid to Cree. Also, as a result of Cree's decision to focus on running the business, Wolfspeed will now be reported as a separate segment of Cree's continuing operations.