SMART Global Holdings announced it has entered an agreement with Cree to purchase its LED Products business unit, known as Cree LED, for upwards of $300 million. The purchase includes fixed upfront and deferred payments, in addition to contingent consideration.

Cree LED is a portfolio of LED chips and high-performance LED components. By leveraging SMART’s platform, Cree LED will be positioned to deliver industry-leading LED products and solutions.

Some strategic benefits per a company press release include:

• Leading positions in compelling markets
• Global customer and distribution network: With locations in the United States, China and Hong Kong, Cree LED serves over 1,000 customers through direct sales as well as a strong global distribution network.
• Broad strengths and added capabilities: Cree LED added over 2,000 employees, including 200 engineers, a strong leadership and general management team, as well as strength in R&D, sales and marketing, and extensive global channel management.
• The transaction is expected to be immediately accretive to Gross Margin, Adjusted EBITDA, Non-GAAP EPS and Free Cash Flow, while providing greater consistency to overall earnings profile.

The agreement, which has been approved by the board of directors that represent both companies, declares SMART will make an initial payment of $50 million in cash upon closing, and an additional $125 million in a seller-financed note payable interest only until a balloon payment due in August 2023. Cree may receive an earn-out payment up to $125 million based on revenue and gross profit performance of Cree LED in the first four quarters after the transaction.

For more information, visit https://ir.smartm.com/news-releases/news-release-details/smart-global-holdings-acquire-crees-led-business