Cree is selling its lighting business to Ideal Industries, an Illinois-based electric power control and management company, to continue its strategy of becoming a more focused, powerhouse semiconductor company.

Cree announced the execution of a definitive agreement to sell Cree Lighting, the lighting products business unit, which includes the LED lighting fixtures, lamps and corporate lighting solutions business for commercial, industrial and consumer applications. According to Cree, the deal is about US$310 million before tax. The company expects to receive an initial cash payment of US$225 million, subject to purchase price adjustments, and has the potential to receive a targeted earn-out payment of approximately US$85 million based on an adjusted EBITDA metric for Cree Lighting over a 12-month period beginning two years after the transaction closes.

Ideal Industries said Cree Lighting will become a separate operating division of IDEAL and will continue to be led by current management. The transaction is expected to close within the second quarter of 2019.

By cutting off the lighting business, Cree aims to focus on its Wolfspeed business with the development of Silicon Carbide and GaN technologies. Gregg Lowe, CEO of Cree, said, “Over that time frame, we have grown Wolfspeed by more than 100%, acquired the Infineon RF business, more than doubled our manufacturing capacity of Silicon Carbide materials, and signed multiple long-term supply agreements, which, in aggregate, are in excess of US$500 million. With the addition of today’s lighting divestiture news, Cree is well positioned as a more focused semiconductor leader.”

Meanwhile, Cree also posted a business update for its third quarter of fiscal 2019 ending March 31, 2019. The company targets revenue from continuing operations in a range of US$271 million to US$277 million. Wolfspeed revenue is targeted in a range of US$139 million to US$141 million, and LED Products revenue is targeted in a range of US$132 million to US$136 million. Cree Lighting will be classified as discontinued operations.