Cree goes global with $200m COTCO acquisition
Cree, the US maker of SiC- and GaN-based semiconductors, is set for a major expansion into China.
The Durham, NC, firm is to acquire the high-brightness LED packager COTCO Luminant Device in a cash-and-stock deal valued at $200 million.
Hong Kong-based COTCO, which sells packaged LEDs for applications such as large-scale video screens, traffic signals and automotive lighting, was founded ten years ago and was already a customer of Cree s. In the most recent fiscal year, COTCO accounted for around $25 million of Cree s chip revenue.
COTCO Luminant Device s parent company, COTCO Holdings, will receive $70 million in cash and just over 7.6 million shares in Cree stock when the deal is completed.
Up to $125 million in additional payment may be made if the COTCO business hits certain financial targets over the next two fiscal years.
Cree says that the deal will add between 15 percent and 20 percent to its annual sales, equivalent to approximately $55 million-$70 million.
Cree CEO Chuck Swoboda described the deal as the next step in the company s strategy to enable the "solid-state lighting revolution".
"We look forward to working together to expand our business in China and to transform Cree into a truly global company," Swoboda said.
Once the deal is completed, Cree will also own the COTCO subsidiaries called COTCO International, COTCO Opto Technology, and COTCO Japan.
COTCO Holdings will consolidate its remaining Intelligent Module and Display business units under a new company called Light Engine Ltd., while because Cree will own the "COTCO" trade name, the name of the parent company will change to "United Luminous International (Holdings) Ltd".
• Cree shares were up 7 percent at nearly $17.50 in early trading after the COTCO acquisition was announced.