HPE acquires SGI for US$275 million

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HPE acquires SGI for US$275 million

Hewlett Packard Enterprise is doubling down on its high-performance computing offensive with an agreement to acquire SGI in a US$275 million all-cash deal.

HPE said the acquisition of SGI, a longtime computing innovator whose 3D worksations were considered state-of-the-art in the early 1990s, will strengthen its position in the US$11 billion high-performance computing market, which is growing at a six percent to eight percent compound annual growth rate.

HPE said the deal provides it with a "highly complementary" product portfolio, expanding its presence in key high-performance computing verticals including research, life sciences and government.

Under the terms of the deal, HPE will pay US$7.75 per share in cash for SGI shares – net of cash and debt.

SGI shares, which closed at US$5.98 Thursday, soared 29 percent, or US$1.71, in after-hours trading to US$7.69 after the deal was announced.

HPE shares, meanwhile, which closed at US$21.78 Thursday, were down one cent to US$21.77.

HPE said the deal, which is expected to be completed in the first quarter of its fiscal year 2017, which begins 1 November, will be neutral in the first full year following the close of the deal.

SGI, which has 1,100 employees, closed out its last fiscal year ended 24 June with a loss of US$11.17 million on sales of US$532.9 million. That compared with a fiscal year 2015 loss of US$39.14 million on sales of US$521.25 million.

SGI said it currently has 174 partners in North America with approximately 21 percent to 30 percent of its sales coming from the channel.

The SGI deal comes in the midst of reports that private equity companies are contemplating buying some HPE software assets such as Autonomy or Vertica or even a full buyout of HPE.

It also comes just nine days after HPE restructured its cloud business, moving its Helion OpenStack and Helion CloudSystem teams to HPE's Enterprise Group to be part of the newly created Software-Defined and Cloud Group.

In the wake of the restructuring, Bill Hilf, senior vice president and general manager of the HPE cloud business, decided to leave the company, along with Manish Goel, senior vice president and general manager of HP storage.

The cloud shakeup comes after a June sales and marketing restructuring with both CTO Martin Fink and chief customer officer John Hinshaw revealing plans to step aside later this year.

This article originally appeared at crn.com

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