April 25, 2024

Cree agrees that the sale of Wolfspeed to Infineon's US Foreign Investment Committee may not be approved!

On February 9th, Cree, Inc., the market leader in LED lighting, announced today that it has finally agreed to sell its Wolfspeed Power and RF division (Wolfspeed), including silicon carbide substrate business for power supply, RF and Gemstone application to Infineon Technologies AG (FSE: IFX/OTCQX: IFNNY). According to a recent communication with the Committee on Foreign Investment in the United States (CFIUS), the parties believe that the current form of trading is unlikely to be approved by CFIUS. The two sides are exploring whether there are alternatives to modify the transaction to mitigate or resolve regulatory issues, and if the parties agree, it involves supplementing CFIUS. There is no guarantee that the parties will be able to reach a transaction structure with a CFIUS license. Therefore, before the outcome of these efforts, the possibility or time to close the transaction is uncertain. Previously, German chipmaker Infineon Technologies AG also announced that it has agreed to acquire Wolfspeed's Wolfspeed assets under the US-based North Carolina-based company for $850 million in cash. Infineon CEO Reinhard Ploss also said that the silicon carbide chips produced by Wolfspeed will gradually replace traditional chips in the next few years, especially in the electric and hybrid vehicles market. Currently, about 50% of Infineon's sales come from the corporate sector. The acquisition of Wolfspeed will increase the company's diluted earnings per share and profit margin in the short term. At present, Infineon's gross profit margin is about 55%, and it is expected to maintain an average annual growth rate of 20% in the next four years. As for the $850 million acquisition of the Wolfspeed deal, Infineon said that $720 million will be funded through bank loans and another $130 million in cash.

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