DURHAM, N.C. (AP) — Cree Inc. has agreed to pay up to $103.4 million in cash and stock to acquire LED Lighting Fixtures Inc., the chip maker said Friday.
The acquisition will add revenue but lower Cree's near-term earnings.
Privately held LED Lighting makes energy-efficient products that use light-emitting diodes, or LEDs, which Cree manufactures. Cree is working to expand its LED business as demand for energy-saving products has risen because of high costs and government mandates.
The deal, which Cree expects to close next month, will reduce earnings by 1 cent per share in its third fiscal quarter and add $1 million to revenue.
It expects the acquisition to hurt net income ''slightly'' next fiscal year but add to adjusted profits when excluding special costs. Cree expects LED Lighting to add $30 million to revenue in fiscal 2009.
Cree shares fell 70 cents, or 2.2 percent, to $31.10 in premarket trading.
Cree said the acquisition will provide ''direct access'' to the efficient-lighting market. That market is set to expand because of an energy bill passed in December that requires traditional light bulbs to be replaced by energy-efficient ones, starting in 2012.
''We believe the market is at a tipping point, with billions of sockets in existing fixtures now addressable with energy-efficient LED lighting,'' Chief Executive Chuck Swoboda said in a statement.
Cree will pay $77 million of the price up front in cash and stock. LED Lighting can receive up to an additional $26.4 million over the next three years, with the sum tied to new products and retention of key employees.
The cash and stock portions of the purchase price are to be determined at the closing. The number of shares will be based on Cree's average closing share price over the past 20 days, which is $28.32.
