Cree Inc. announced Friday that it was selling its lighting business for $310 million to Ideal Industries Inc. to focus on its other businesses.

Cree expects to receive an initial cash payment of $225 million, subject to purchase price adjustments, and has the potential to receive a targeted earn-out payment of approximately $85 million based on the earnings for Cree Lighting over a 12-month period beginning two years after the transaction closes.

The agreement continues Cree’s strategy, announced in February 2018, to focus on its semiconductor business and provide capital for Wolfspeed, its core Power and RF business.

Durham-based Cree is an innovator of Wolfspeed power and LEDs. Cree’s Wolfspeed product families include material and devices targeted for various applications such as electric vehicles, fast charging inverters, power supplies, telecom and military and aerospace.

“With the addition of today’s lighting divestiture news, Cree is well positioned as a more focused semiconductor leader,” said CEO Gregg Lowe in a statement. “Cree’s technologies are at the forefront of the automotive industry’s transition to zero emission electric vehicles, the telecommunications industry’s move to faster 5G networks and the continued ramp up of LEDs for specialty applications.”

Cree’s shares rose $1.47, or 2.7 percent, to $55.03 in Friday morning trading.

Ideal Industries is based in Sycamore, Illinois, and provides products and technology for a number of industries, including electrical and wire processing, aerospace, LED power, automotive and the alternative energy industries.

Cree said it expects to incur an impairment charge on the Cree Lighting intangible assets, will be reflected in discontinued operations when it reports its third quarter results.

The transaction is expected to close by the end of June.