Cree Buys Ruud for $525 Million

Aug 17, 2011 The acquisition of Ruud Lighting Inc. by Cree for about $525 million in cash and stock has been announced today. This acquisition is part of Cree's intention to to expand into the market for outdoor illumination. It was reported that Ruud will continue to be based in Racine, Wisconsin, and operate as a subsidiary of Cree. 

“Ruud is a leader in bringing LEDs outdoors and will help us expand the market for all LED products and components,” Cree Chief Executive Officer Chuck Swoboda told the press.

 According to press release Cree today acquired all of the outstanding stock of Ruud Lighting for an estimated net cost of approximately $525 million, comprised of $372 million in cash, $211 million in stock (valued at today’s market closing price of $34.74/share), $85 million paid concurrently with the acquisition to retire outstanding debt, offset by tax benefits noted below. The stock portion is comprised of 6,074,833 Cree shares. The acquisition was structured for tax purposes as a deemed asset purchase, which means the cost to Cree will be offset by approximately $143 million of expected future tax benefits related to the acquisition.

Ruud Lighting’s financial and operating results will be consolidated for the balance of Cree’s first quarter of fiscal 2012 and Cree is revising its targets for this quarter. These revised targets include approximately 40% of a full quarter’s results from Ruud Lighting. Cree now targets revenue in a range of $265 to $275 million with GAAP gross margin of approximately 37% to 38% and non-GAAP gross margin on the low end of our previous target range of 38% to 39%. GAAP operating expenses are now targeted to increase by approximately $13 million from the previous quarter to $88 million, or $69 million on a non-GAAP basis. The tax rate for the first quarter is now targeted at 21.5%. GAAP net income, which includes expenses related to the transaction is targeted at $9 million to $12 million, or $0.08 to $0.11 per diluted share. Non-GAAP net income is targeted at the low end of our previous target range of $28 million to $31 million, or $0.25 to $0.28 per diluted share. Cree targets this transaction to be slightly dilutive to GAAP earnings for the balance of fiscal 2012 and accretive to non-GAAP earnings for the balance of fiscal 2012. The GAAP and non-GAAP earnings per share targets are based on an estimated 112.9 million diluted shares outstanding. Targeted non-GAAP earnings exclude expenses related to the amortization of acquired intangibles of $0.04 per diluted share, stock–based compensation expense of $0.10 per diluted share and one-time acquisition related expenses of $0.03 per diluted share. 

Author:  Alice Jones

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