LED Light Company in Acquisition

By Chuck Swoboda
Purchase of LED Lighting Fixtures is expected to hurt short-term earnings but increase company revenue in the long run.

Responding to government mandates and in a move to increase its market share of the energy efficiency business, Cree Inc. announced today it will acquire LED Lighting Fixtures Inc. We believe the market is at a tipping point, with billions of sockets in existing fixtures now Addressable with energy-efficient LED lighting, Cree's chief executive Chuck Swoboda said in a statement.


The company makes light-emitting diodes which LED Lighting incorporates into its products. Based on an energy bill passed in December, regular light bulbs in the US must be replaced with energy-efficient lights by 2012. Other jurisdictions have been even more aggressively phasing out Incandescent bulbs (see European Union to phase out incandescent lightbulbs.)

The acquisition could cost Cree as much $103 million and the deal is expected to close next month. Cree is to pay $77 million of the price up front in cash and stock. An additional $26.4 million could be paid to LED Lighting based on new products and Retention rates for key employees.


The cash and stock portions of the purchase price are to determined at closing. Cree's average share price over the past 20 days will determine the number of shares. Cree expects third quarter earnings to drop by a penny per share, but company revenue is expected To increase by $1 million. Cree also expects LED Lighting to contribute $30 million to the company revenue in 2009.