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 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%.