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Cree Acquires Ruud Lighting, Inc. to Accelerate the LED Lighting Revolution

Wednesday, August 17, 2011 4:43 PM


Cree, Inc. (Nasdaq: CREE), a market leader in LED lighting, today announced the acquisition of Ruud Lighting, Inc., a leader in LED outdoor lighting, at an estimated net cost of approximately $525 million. Combining two highly complementary LED innovators, the acquisition allows Cree to extend its leadership position and increase the adoption of energy-efficient LED lighting. The companies' shared focus on best-in-class LED-based systems has led to thousands of LED lighting installations over the past several years.

Today Cree announced the acquisition of Ruud Lighting, Inc. which includes the outdoor LED lighting  ...

Today Cree announced the acquisition of Ruud Lighting, Inc. which includes the outdoor LED lighting product line from BetaLED. As part of the nation's largest streetlight conversion project, the City of Los Angeles is planning to install 128,000 BetaLED fixtures over four years, featuring Cree XLamp LEDs. (Photo: Business Wire)

This acquisition creates a market leader for indoor and outdoor LED lighting, accelerating adoption and expanding the market for both Cree's LED systems and components. Other synergies include increased access to the lighting market through expanded sales channels and operating leverage from increased economies of scale. Through a broader presence in the lighting systems market, Cree gains additional knowledge and expertise to develop the next generation of industry-leading, lighting-class LED components.

"Cree is taking another bold step in leading the LED lighting revolution, creating a company that has an unrivaled focus and commitment to driving LED lighting adoption," said Chuck Swoboda, chairman and chief executive officer of Cree.

"Joining Cree was the right thing to do so Ruud Lighting can build on our leadership position; as leaders we create opportunities for everyone," said Alan Ruud, chairman and chief executive officer of Ruud Lighting.

Ruud Lighting will continue to be based in Racine, Wis., and will operate as a subsidiary as part of Cree's lighting business. Additionally, Alan Ruud has joined the Cree board. Ruud Lighting, through its BetaLED® product line, was one of the first traditional lighting companies to transform the majority of its business to LED-based systems.

Cree today acquired all of the outstanding stock of Ruud Lighting for an estimated net cost of approximately $525 million, comprised of $372 million in cash, $211 million in stock (valued at today's market closing price of $34.74/share), $85 million paid concurrently with the acquisition to retire outstanding debt, offset by tax benefits noted below. The stock portion is comprised of 6,074,833 Cree shares. The acquisition was structured for tax purposes as a deemed asset purchase, which means the cost to Cree will be offset by approximately $143 million of expected future tax benefits related to the acquisition.

Ruud Lighting's financial and operating results will be consolidated for the balance of Cree's first quarter of fiscal 2012 and Cree is revising its targets for this quarter. These revised targets include approximately 40% of a full quarter's results from Ruud Lighting. Cree now targets revenue in a range of $265 to $275 million with GAAP gross margin of approximately 37% to 38% and non-GAAP gross margin on the low end of our previous target range of 38% to 39%.


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