Wolfspeed To Sell Radio Frequency Business To MACOM For $125M In Cash And Stock

Wolfspeed Inc WOLF inked a deal to divest its radio frequency business (Wolfspeed RF) to MACOM Technology Solutions Holdings Inc. MTSI for $125 million.

The deal price comprises around $75 million in cash and 711,528 shares of MACOM common stock for $50 million (based on the 30 trading day average for common shares through Aug. 21, 2023). 

The Durham, North Carolina-based company expects the deal to close the transaction by end-2023.

The acquisition is subject to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the satisfaction of customary closing conditions. 

Post-buyout, MACOM will gain control of WOLF's 100mm GaN wafer fabrication facility in North Carolina about two years following the transaction's closing to adjust WOLF's relocation of certain production equipment. 

Wolfspeed CEO Gregg Lowe cited "significant growth" in the automotive, industrial and renewable energy markets.

"This transaction also represents a tremendous opportunity for our RF team to grow and operate at scale, leveraging MACOM's diverse customer base, RF engineering leadership, and operational efficiencies," he said.

Outlook: To factor in asset sales, Wolfspeed revised the guidance for Q1 FY24 to account for RF business operations as discontinued operations.

For Q1 FY24, Wolfspeed lowered the outlook for revenue from continuing operations of $185 million - $205 million vs. $220 million - $240 million earlier and consensus of $231.14 million.

Meanwhile, the company reaffirmed Q1 adjusted EPS guidance at $0.60 to $0.75 vs. the consensus for an EPS loss of $(0.53). 

As of June 25, 2023, cash, cash equivalents, and short-term investments stood at $2.95 billion. 

Price Action: WOLF shares are trading higher by 3.35% at $45.96 on the last check Tuesday.

Image: WOLF