SMART Global Holdings to Acquire Cree’s LED Business
Transformative Acquisition Significantly Advances Growth and Diversification Strategy
Builds on Leadership as Global Provider of Specialty Solutions with
Entrance into Niche LED Lighting Markets
Expected to be Immediately Accretive to Non-GAAP EPS and Free Cash Flow
SMART is a global leader in specialty solutions serving the electronics industry for over 30 years across the memory, computing, and storage markets. Cree LED comprises a broad portfolio of highly efficient LED chips and high-performance LED components and represents one of the strongest global brands in the LED business. Leveraging SMART’s comprehensive global platform and proven operational excellence, Cree LED will be well positioned to continue to deliver industry-leading LED products and solutions.
“As a leader in LED technology with a highly respected brand and expansive patent portfolio, Cree LED has a track record of delivering best-in-class solutions through well-established distribution and sales channels,” said
“We are pleased to announce the sale of our LED Products business to SMART, which represents another key milestone in our transformational journey to create a pure-play global semiconductor powerhouse,” said Cree CEO
Compelling Strategic and Financial Benefits
- Leading positions in compelling markets: Cree LED provides best-in-class, high-power technology to niche markets, within the large global LED lighting industry, including general lighting, specialty lighting, large-format video screens and outdoor and architectural lighting.
- Strong track record of innovation: With a highly focused R&D-centric strategy, Cree LED is a technology leader with more than 2000 patents, offering a broad portfolio of specific, application-optimized solutions with notable expertise in high-power applications and color technology.
- Global customer and distribution network: With locations in
the United States, Chinaand 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 adds more than 2,000 colleagues to our workforce, 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.
- Enhances financial profile and is expected to be immediately accretive: 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.
Transaction Terms and Financing
Under the terms of the agreement, which has been approved by the boards of directors of both companies, SMART will make an initial cash payment of
Following the close of the transaction, which is expected to occur in the first calendar quarter of 2021, SMART expects to license and incorporate the Cree LED brand and trademarks into the SMART portfolio of businesses.
Barclays is acting as financial advisor and O’Melveny & Myers is acting as legal advisor to SMART.
Conference Call and Webcast Information
SMART will also host a conference call to discuss the transaction. A live webcast and the accompanying presentation relating to the transaction will be available in the “Investors” section of SMART’s website at www.smartgh.com in advance of the conference call.
SMART Conference Call Information
|Dial-in #:||(US toll-free) +1-866-487-6452 / (International toll) +1 213-660-0710|
A replay of the conference call will be accessible for one week following the call as follows:
Replay: +1-855-859-2056 (US), or +1-404-537-3405 (International); Passcode: 3097954; or through the Investors section of the SMART website at www.smartgh.com
The SMART lines of business are leading designers and manufacturers of electronic products focused on memory, computing and storage technology areas. SMART specializes in application specific product development and support for customers in enterprise, government and OEM sales channels. Customers rely on SMART as a strategic supplier with top tier customer service, product quality, and technical support with engineering, sales, manufacturing, supply chain and logistics capabilities worldwide. SMART targets customers in markets such as communications, storage, networking, mobile, industrial automation, industrial internet of things, government, military, edge computing and high performance computing. SMART operates in three primary product areas: Specialty Memory products,
For more information about
This release contains, and statements made during the above-referenced conference call or contained in our investor presentation will contain “forward-looking statements” including among other things, statements regarding future events and the future financial performance of SMART (including the business outlook for the next fiscal quarter) and statements regarding growth drivers in SMART’s industries and markets. These statements are only predictions and may differ materially from actual future events or results due to a variety of factors, including but not limited to: our inability to obtain or delays in obtaining all regulatory approvals and otherwise completing all steps required to close on the acquisition of Cree LED; issues, delays or complications in completing the acquisition of Cree LED or in the transitioning the carveout of Cree LED to a standalone business separate from
Certain non-GAAP financial measures are contained in this press release or will be discussed on our conference call, including non-GAAP EPS and cash flow, non-GAAP gross profit, non-GAAP operating income, Adjusted EBITDA, non-GAAP net income, and non-GAAP net income per diluted share. We define Adjusted EBITDA as GAAP net income (loss) plus net interest expense, income tax expense, depreciation and amortization expense, share-based compensation expense, loss on extinguishment of debt/revolver, capped call mark to market (MTM) adjustment, restructuring expenses, integration expenses, COVID-19 expenses, acquisition-related expenses, gain on settlements and other infrequent or unusual items. Adjusted EBITDA is not a measure of financial performance calculated in accordance with
The non-GAAP financial results presented herein or discussed on our conference call exclude share-based compensation expense, intangible amortization expense, loss on extinguishment of debt/revolver, capped call MTM adjustment, convertible debt original issue discount (OID) and fees, restructuring expenses, integration expenses, COVID-19 expenses, acquisition-related expenses, gain on settlements and other infrequent or unusual expenses, and with respect to non-GAAP diluted EPS, foreign currency gains (losses). These non-GAAP financial measures are provided to enhance the user’s overall understanding of our financial performance. By excluding these charges, as well as any related tax effects, our non-GAAP results provide information to management and investors that is useful in assessing SMART’s core operating performance and in evaluating and comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to evaluate financial results, to plan and forecast future periods, and to assess performance of certain executives for compensation purposes. The presentation of this additional information is not meant to be a substitute for the corresponding financial measures prepared in accordance with
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Source: SMART Global Holdings, Inc.