February 10, 2017
Cree, Inc. today provided an update regarding its definitive agreement to sell its Wolfspeed Power and RF division (Wolfspeed) Infineon Technologies AG. Based on recent communications with the Committee on Foreign Investment in the United States (CFIUS), the parties believe the transaction in its current form is not likely to be approved by CFIUS. The parties are exploring whether there are alternatives to modify the transaction to mitigate or address the regulatory concerns, which if agreed by the parties, would involve a refiling with CFIUS.
Last July, Infineon and Cree, entered into a definitive agreement for Infineon to acquire the Wolfspeed Power and RF division. The deal was also to include the related SiC wafer substrate business for power and RF power. The purchase price for this planned all-cash transaction is $850 million (approximately €740 million).
Now, the Committee on Foreign Investment in the United States (CFIUS) has informed Infineon and Cree that the transaction poses a risk to the national security of the United States. Furthermore, CFIUS had not identified any mitigation measures that it believed would adequately mitigate the particular national security risks posed by the transaction.
Against this background, Infineon issued a statement that it is of the opinion, that there is a considerable risk that the transaction, as agreed, is not going to close. However, Infineon also stated that it remains committed to work closely together with both CFIUS and Cree to find solutions that would mitigate the concerns raised by CFIUS.
This highly-anticipated acquisition (it was the fifth-most-read industry news story on PowerPulse in 2016, out of the 2,500 overall stories covered by this publication) was expected to enable Infineon to provide the broadest offering in compound semiconductors and further strengthen Infineon as a leading supplier of power and RF power solutions in high-growth markets such as electro-mobility, renewables and next-generation cellular infrastructure relevant for IoT.
Now, there is no assurance that the parties could achieve a transaction structure which would obtain CFIUS clearance. As a result, pending the outcome of these efforts, the likelihood or timing of closing the transaction is uncertain.