HPE inks deal to buy supercomputer maker Cray for $1.3 bn

Hewlett Packard Enterprise (HPE) announced the acquisition of supercomputer manufacturer Cray in a deal valued at about $1.30 billion.
Cray generated $456 million in revenue in its last fiscal year. Seattle-headquartered Cray has U.S.-based manufacturing operations and 1,300 employees worldwide.

The $35 per share deal represents a premium of 17.4 percent to Cray’s last close.

HPE said it expects the deal to increase its footprint in federal business and academia, and sell supercomputing products to its commercial clients.

The deal, expected to close by the first quarter of HPE’s fiscal year 2020, will add to its adjusted operating profit in the first full year after closing.

As part of the deal, HPE expects to incur one-time integration costs that will be absorbed within its fiscal year 2020 free cash flow outlook of $1.9 billion to $2.1 billion that remains unchanged.

“HPE and Cray will have enhanced opportunities for growth and the integrated platform, scale and resources to lead the Exascale era of high performance computing,” Antonio Neri, president and CEO of HPE, said.

Cray’s supercomputing systems can handle massive data sets, converged modeling, simulation, artificial intelligence, and analytics workloads.

Cray recently announced an Exascale supercomputer contract for over $600 million for the U.S. Department of Energy’s Oak Ridge National Laboratory.

The company was also part of an award with Intel for the first U.S. Exascale contract from the U.S. Department of Energy’s Argonne National Laboratory, with Cray’s portion of the contract valued at over $100 million.

Over the next three years the HPC segment of the market and associated storage and services is expected to grow from $28 billion in 2018 to $35 billion in 2021, a compound annual growth rateof approximately 9 percent.

Exascale is a growing segment of overall HPC opportunities and more than $4 billion of Exascale opportunities are expected to be awarded over the next five years, according to research reports.

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