Silicon Graphics said that it will be acquired by Hewlett Packard Enterprise in the newly-announced definitive agreement. This will have HPE paying $7.75 per share for SGI, which is a roughly 29% premium over its closing price on Thursday, Aug. 11, 2016. The deal will be funded with cash and is valued at $275 million, including cash and debt. Silicon Graphics’ revenue for fiscal 2016 came in at $533 million.
Silicon Graphics and Hewlett Packard Enterprise are expecting the acquisition to allow the companies to strengthen their leading position and financial performance. This will be caused by the two businesses’ complementary product portfolios and similar market approaches.
Hewlett Packard Enterprise is looking to beef up its high-performance computing and big data analytics efforts with the acquisition of Silicon Graphics. The deal will have SGI’s 1,100 employees joining HPE. They have experience using big data analytics with the scientific, technical, business and government communities.
Hewlett Packard Enterprise said that it expects the deal to be neutral to its first full year earnings after the deal closes. After that initial year, the company is expecting the acquisition to be accretive to its earnings.
Silicon Graphics and Hewlett Packard Enterprise are expecting to deal to be completed during the first quarter of HPE’s fiscal year 2017. The deal will need the approval of regulators before it can be completed.
SGI stock was up 28% and HPE stock was up slightly as of Friday morning.
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