Cree Inc. announced it canceled plans to sell its Wolfspeed power and radio frequency division to Infineon Technologies AG for $850 million, and will instead receive a $12.5 million cancellation fee.
The release confirms a Feb. 8 update on the transaction filed with the Securities and Exchange Commission in which the company announced the transaction was unlikely to be approved by the Committee on Foreign Investment in the United States.
The committee reviews the potential sales of U.S. companies involved in the defense industry and determines whether the deals will undermine national security.
According to the press release, “Cree and Infineon have been unable to identify alternatives which would address the national security concerns of the Committee.”
Chuck Swoboda, chairman and CEO of Cree, said that company would focus on growing the division instead. “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,” Swoboda said.
Cree is a manufacturer of lighting-class LEDs and semiconductors used in power and radio frequency applications. The Wolfspeed division includes the “silicon carbide substrate business” and has applications in power, radio frequency, and radar and telecommunications system.
Wolfspeed was originally going to be spun off as an independent publicly traded company, but in July Cree announced it planned to sell the division to German semiconductor giant Infineon.
According to the press release “as a result of the transaction termination and Cree’s decision to focus on running the Wolfspeed business, Wolfspeed will now be reported as a separate segment of Cree’s continuing operations.”
In 1987 Cree was founded in Durham when researchers from North Carolina State University discovered a way to synthesize the valuable silicon carbide crystals used in semiconductors in a laboratory.
The Wolfspeed division is also located in Durham and has 550 employees.
Cree’s stock dropped 8 percent following the transaction update on Feb. 8, but has slowly recovered and closed on Friday at $26.47, up 26 cents.
