AmTechThinks GE Should Buy Cree; GE Disagrees

Takeover chatter continues to drive up shares of Cree Research (CREE). By far the biggest bull on the stock, American Technology Research analyst Andrew Huang weighs in on the rumors Tuesday, and finds they make sense (not too surprising).

“Recent rumors that Cree could get acquired make sense to us given that Cree is the last publicly traded pure-play in the market,” he wrote in a note Tuesday morning (pure play LED play, I assume he means, by the way). He says an acquisition by rumored suitor General Electric (GE) “would make strategic sense.”

But he also sees other potential bidders, including “component vendors,” such as Rohm (ROH) or Matsushita Semiconductor (MC); South Korean OEMs, such as Samsung or LG, and lighting fixture makers, such as Cooper Lighting or Schneider Electric.

He adds that “with Cree’s LED fundamentals improving, we think it is only a matter of time before consensus estimates start heading materially higher.”

Cree, which rose $2.30 on Friday, was up another 42 cents Tuesday at $27.02. That, by the way, is less than half of Huang’s $55 price target, which suggests either that the stock is absurdly cheap, or Huang is absurdly bullish (or maybe some combination). Take your choice.

My colleagues over at Dow Jones Newswires are reporting that General Electric “isn’t interested in buying Cree,” citing “a source close to G.E.”

Comments

[DirtSimple:]

Now really ..... If queried, would anyone expect GE to say "Yes, CREE would fit nicely into our "Eco-imagination" strategy, and we plan to tender for the shares." ???? What a useless closing comment to this piece!

2007 Sep 05 09:39 PM

[calvino:]

Mine own source in Fairfield says that GE is not interested in Cree because they are going to contest their IP portfolio and file crosspatents. Then after they destroy CREE, they will have the market all to themselves and continue to reward their shareholders with their ecomagination, if not price appreciation or dividends. As a concession, GE will license its conversion electronics patents for six months, outside of the north american, european and asian markets, renewable at the end of the period on similar terms.

2007 Sep 06 04:37 AM

[DirtSimple:]

Now there's some rationale that makes sense .... draining the IP moat is a very plausible game plan ....

2007 Sep 06 06:39 AM