SAN FRANCISCO Feb. 20, 2017 — The $850 million acquisition of Cree Inc.’s Wolfspeed Power and RF division was called off after a federal government committee raised concerns about the deal’s implications for U.S. national security.
Following the termination of the transaction, Cree (Durham, N.C.) reversed course and said it would continue running the Wolfspeed business and report its financials as a separate segment of its continuing operations. Cree had said last July that the proposed sale of Wolfspeed to Infineon was triggered by Cree’s strategy to heighten its focus on being an LED lighting company.
”The Wolfspeed business has performed well this year as our customers have further realized the value of our unique technology and is on a great path as a part of Cree,” said Chuck Swoboda, Cree chairman and CEO, in a press statement. “The strength of our balance sheet and improving operating cash flow gives us the ability to invest in Wolfspeed, while continuing to pursue our LED and lighting growth plans.”
As a result of the acquisition’s termination, Infineon must pay a $12.5 million fee to Cree, Cree said.
Both Cree and Infineon said earlier this month that the Committee on Foreign Investment in the United States (CIFUS)—a multi-agency government committee that has the power to block acquisitions on U.S. national security grounds—had raised concerns about the deal. At the time, both companies said they would explore whether the sale could be pushed through under terms that CIFUS would agree to, including potential divestiture of some of the Wolfspeed business.
It is unclear what specifically about the deal raised national security concerns. CIFUS does not disclose details of its investigations because it is prohibited by law from doing so. But Cree has in the past touted Wolfspeed’s GaN-on-SiC RF technology for military applications.
—Dylan McGrath covers the semiconductor industry and business news for EE Times.
First published on EE Times
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Cree announced a couple days later that Frank Plastina, the former CEO of Tekelec, and hired by Cree to head Wolfspeed after it was spun off from Cree, will be stepping down as the Wolfspeed CEO. Cree said they will be reintegrating Wolfspeed as a division of Cree, so the CEO position is no longer needed. Cengiz Balkas will now reassume his role as general manager of Wolfspeed. Further details of the executive changes at Wolfspeed