The old skool bulb is on its way out, and more energy efficient LEDs (light-emitting diodes) are taking their sweet time coming down in price and getting more mainstream. But acquisitions like the one LED lighting company Cree announced Friday morning will help. The company said that it plans to buy startup LED Lighting Fixtures, which makes LED hardware for homes and businesses, for a cash-and-stock deal of around $77 million, plus up to another $26.4 million over a three-year period.
LED Lighting Fixtures is a Morrisville, N.C.-based LED startup that makes a light product that can plug into a regular socket, and can help retrofit homes and business with LEDs — it’s still pricey at around $100. The company already uses Cree’s LED chips and hardware in its products, and for Cree the purchase will help it retrofit existing fixtures, and provide the company better access to the general lighting market.
Bringing down the cost of LEDs and making them more accessible is a trend that is just going to gain more momentum as incandescent bulbs get banned via the Energy Bill. And acquisitions to help the trend along aren’t uncommon; Philips, the world’s largest producer of light bulbs, recently acquired Genlyte for $2.7 billion, and bought out LED company Lumileds in 2005.
So far Cree has been lighting the way for the LED movement. Philips recently showed off an LED-based bulb designed to fit into a standard socket, but, according to American Technology Research analyst Andrew Huang, the bulb uses several of Cree’s blue LED chips.
Earlier this month Durham, N.C.-based Cree reported a second-quarter profit above Wall Street’s expectations and said it sees third-quarter earnings coming in ahead of analysts’ average forecast as well. Analysts like Huang love the stock and earlier this week sent out a note aggressively urging investors to buy it up.
Cree and LED Lighting Fixtures expect the deal to close in March, and for fiscal year 2009, Cree predicts the deal will add $30 million in revenues, but that it will be slightly dilutive to earnings per share on a GAAP basis. LED Lighting Fixtures will now be called Cree LED Lighting Solutions.