Key Highlights

• Penguin Solutions (NASDAQ:PENG) has entered a definitive agreement to sell its Cree LED Business to Transom Capital Group in an all-cash transaction.

• The divestiture is expected to close in the first calendar quarter of 2027, subject to customary closing conditions.

• Cree LED represents approximately 10% of Penguin Solutions' total projected fiscal 2027 net sales.

• The company reaffirmed its fiscal 2027 financial outlook and reported 58% year-over-year net sales growth in the second half of fiscal 2026.

Penguin Solutions Inc. (NASDAQ:PENG), the self-described AI Factory Platform Company, has announced a definitive agreement to divest its Cree LED business to Transom Capital Group, a middle-market Private Equity firm. The all-cash transaction is designed to accelerate Penguin's transformation into a company focused entirely on Data Center AI infrastructure and memory solutions.

A Strategic Realignment Toward AI Infrastructure

The planned sale represents the latest step in Penguin Solutions' ongoing portfolio realignment. By shedding the Cree LED business, the company aims to concentrate its resources and capital allocation on what it sees as growth opportunities in AI data centers. The divestiture is expected to close in the first calendar quarter of 2027 and remains subject to customary closing conditions. Lazard Freres & Co. LLC is serving as Financial Advisor to Penguin Solutions, while Latham & Watkins LLP is acting as legal counsel.

Penguin Solutions CEO Kash Shaikh framed the transaction as a continuation of the company's pivot, noting that since launching the AI Factory Platform earlier in 2026, the company has delivered 58% year-over-year net sales growth in the second half of fiscal 2026, with Earnings growing at an even faster rate than revenue. The company's Full-Stack AI Factory Platform strategy combines infrastructure software, advanced memory, compute systems, and end-to-end services.

What Happens to Cree LED?

Under Transom Capital's ownership, Cree LED will operate as a standalone LED business. The unit brings a longstanding history of innovation and differentiated LED technologies spanning lighting, displays, and specialty applications. Transom Managing Director Conor Davenport noted plans to Leverage the firm's operational expertise to position Cree LED for long-term viability as an independent entity.

The Cree LED business currently accounts for roughly 10% of Penguin Solutions' total projected fiscal 2027 net sales. The company plans to update its financial outlook after the transaction closes to reflect the divestiture and its related financial impacts.

Fiscal 2027 Outlook Reaffirmed

Alongside the divestiture announcement, Penguin Solutions reaffirmed its previously issued fiscal 2027 financial outlook, which was provided in its October 6, 2026 earnings release. Importantly, the current outlook includes a full year of expected results from Cree LED, and the company has stated that the underlying expectations for growth and Demand across its AI infrastructure and memory businesses remain unchanged by the transaction.

Looking Ahead

The Cree LED divestiture marks a defining moment for Penguin Solutions as it narrows its operational scope to data center AI infrastructure. With the company reporting accelerating growth and reaffirming its fiscal year targets, the transaction positions Penguin to channel its capital and management attention toward the expanding AI data center market. Whether the strategy delivers sustained results will depend on the company's ability to execute in an increasingly competitive AI infrastructure landscape.