HPE to Acquire Supercomputing Leader Cray

Combined Company Will Drive Next Generation of High Performance

  • Accelerates HPE’s strategy to tackle customers’ most data-intensive
    challenges by combining deep supercomputing talent and cutting-edge
  • Establishes the most comprehensive end-to-end portfolio across
    compute, storage, interconnect, software and services in the fast
    growing High Performance Computing and Artificial Intelligence segments
  • Creates opportunity for significant economic upside through enhanced
    growth and profitability

SAN JOSE, Calif. & SEATTLE–(BUSINESS WIRE)–Hewlett Packard Enterprise (NYSE:HPE) and Cray Inc. (Nasdaq: CRAY), a
global supercomputer leader, today announced that the companies have
entered into a definitive agreement under which HPE will acquire Cray
for $35.00 per share in cash, in a transaction valued at approximately
$1.3 billion, net of cash.

“Answers to some of society’s most pressing challenges are buried in
massive amounts of data,” said Antonio Neri, President and CEO, HPE.
“Only by processing and analyzing this data will we be able to unlock
the answers to critical challenges across medicine, climate change,
space and more. Cray is a global technology leader in supercomputing and
shares our deep commitment to innovation. By combining our world-class
teams and technology, we will have the opportunity to drive the next
generation of high performance computing and play an important part in
advancing the way people live and work.”

The Explosion of Data is Driving Strong HPC Growth

The explosion of data from artificial intelligence, machine learning,
and big data analytics and evolving customer needs for data-intensive
workloads are driving a significant expansion in HPC.

Over the next three years the HPC segment of the market and associated
storage and services is expected to grow from approximately $28 billion
in 2018 to approximately $35 billion in 2021, a compound annual growth
rate1 of 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

Addressing complex challenges and advancing critical academic research,
including predicting future weather patterns, delivering breakthrough
medical discoveries, and preventing cyber-attacks, requires significant
computational capabilities, up to and through Exascale level
architecture. Exascale capable systems enable solutions to these
problems with much greater precision and insight.

“This is an amazing opportunity to bring together Cray’s leading-edge
technology and HPE’s wide reach and deep product portfolio, providing
customers of all sizes with integrated solutions and unique
supercomputing technology to address the full spectrum of their
data-intensive needs,” said Peter Ungaro, President and CEO of Cray.
“HPE and Cray share a commitment to customer-centric innovation and a
vision to create the global leader for the future of high performance
computing and AI. On behalf of the Cray Board of Directors, we are
pleased to have reached an agreement that we believe maximizes value and
are excited for the opportunities that this unique combination will
create for both our employees and our customers.”

Cray is a Leading Innovator in Supercomputer Solutions

Cray is the premier provider of high-end supercomputing solutions that
address customers’ most challenging, data-intensive workloads for making
critical decisions. Cray has a leadership position in the top 100
supercomputer installations around the globe. With a history tying back
to Cray Research, which was founded in 1972, Cray is headquartered in
Seattle, Washington, with US-based manufacturing, and approximately
1,300 employees worldwide. The company delivered revenue of $456 million
in its most recent fiscal year, up 16 percent year over year.

Cray’s supercomputing systems, delivered through their current
generation XC and CS platforms, and next-generation Shasta series
platform, have the ability to handle massive data sets, converged
modeling, simulation, AI, and analytics workloads. In addition to
supercomputers, they offer high-performance storage, low-latency high
performance HPC interconnects, a full HPC system software stack and
programming environment, data analytics, and AI solutions – all
currently delivered through integrated systems.

Cray recently announced an Exascale supercomputer contract for over $600
million for the U.S. Department of Energy’s Oak Ridge National
Laboratory. The system, which is targeted to be the world’s fastest
system, will enable groundbreaking research and AI at unprecedented
scale, using Cray’s new Shasta system architecture and Slingshot
interconnect. 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.

Cray Strengthens and Expands HPE’s High Performance Computing

High performance computing is a key component of HPE’s vision and growth
strategy and the company currently offers world-class HPC solutions,
including HPE Apollo and SGI, to customers worldwide. This portfolio
will be further strengthened by leveraging Cray’s foundational
technologies and adding complementary solutions. The combined company
will also reach a broader set of end markets, offering enterprise,
academic and government customers a broad range of solutions and deep
expertise to solve their most complex problems. Together, HPE and Cray
will have enhanced opportunities for growth and the integrated platform,
scale and resources to lead the Exascale era of high performance

The combination of HPE and Cray is expected to deliver significant
customer benefits including:

  • Future HPC-as-a-Service and AI / ML analytics through HPE GreenLake
  • A comprehensive end-to-end portfolio of HPC infrastructure – compute,
    high-performance storage, system interconnects, software and services
    supplementing existing HPE capabilities to address the full spectrum
    of customers’ data-intensive needs
  • Differentiated next-generation technology addressing data intensive
  • Increased innovation and technological leadership from leveraging
    greater scale, combined talent and expanded technology capabilities
  • Enhanced supply chain capabilities leveraging US-based manufacturing

Significant Economic Upside Expected to be Realized from the

Bringing together HPE and Cray enables an enhanced financial profile for
the combined company that includes several revenue growth opportunities
and cost synergies.

The companies expect the combination to drive significant revenue growth
opportunities by:

  • Capitalizing on the growing HPC segment of the market and Exascale
  • Enhancing HPE’s customer base with a complementary footprint in
    federal business and academia and the company’s ability to accelerate
    commercial supercomputing adoption
  • Introducing new offerings in AI / ML and HPC-as-a-service with HPE

We also expect to deliver significant cost synergies through
efficiencies and by leveraging proprietary Cray technology, like the
Slingshot interconnect, to lower costs and improve product performance.

Transaction Details

As a result of the enhanced financial profiles of the combined
companies, the deal is expected to be accretive to HPE non-GAAP
operating profit and earnings in the first full year following the close.

As part of the transaction, HPE expects to incur one-time integration
costs that will be absorbed within HPE’s FY20 free cash flow outlook of
$1.9B to $2.1B that remains unchanged.

The transaction is expected to close by the first quarter of HPE’s
fiscal year 2020, subject to regulatory approvals and other customary
closing conditions.

Investment Community Conference Call

HPE will conduct a live audio webcast of its conference call to discuss
HPE’s acquisition of Cray. The call is scheduled for Friday, May 17th,
at 8:30 a.m. ET / 5:30 a.m. PT, and the webcast will be available at www.hpe.com/investor/2019Q2HPETOACQUIRECRAY

HPE Q2 FY19 Earnings Announcement

As a reminder, Hewlett Packard Enterprise (NYSE: HPE) will conduct a
live audio webcast of its conference call to review its financial
results for the second quarter of fiscal 2019, which ended April 30,

The call is scheduled for Thursday, May 23, at 4:30 p.m. ET / 1:30 p.m.
PT, and the webcast will be available at www.hpe.com/investor/2019Q2Webcast.

About Hewlett Packard Enterprise

Hewlett Packard Enterprise is a global technology leader focused on
developing intelligent solutions that allow customers to capture,
analyze and act upon data seamlessly from edge to cloud. HPE enables
customers to accelerate business outcomes by driving new business
models, creating new customer and employee experiences, and increasing
operational efficiency today and into the future.

About Cray

Cray Inc. (Nasdaq:CRAY) combines computation and creativity so
visionaries can keep asking questions that challenge the limits of
possibility. Drawing on more than 45 years of experience, Cray develops
the world’s most advanced supercomputers, pushing the boundaries of
performance, efficiency and scalability. Cray continues to innovate
today at the convergence of data and discovery, offering a comprehensive
portfolio of supercomputers, high-performance storage, data analytics
and artificial intelligence solutions. Go to www.Cray.com
for more information.

Additional Information and Where to Find It

In connection with the proposed transaction, Cray will file relevant
materials with the SEC, including a preliminary and definitive proxy
statement. Promptly after filing the definitive proxy statement, Cray
will mail the definitive proxy statement and a proxy card to the
able to obtain a free copy of these documents, when they become
available, at the website maintained by the SEC at www.sec.gov
or free of charge at www.cray.com.

Additionally, Cray will file other relevant materials in connection with
the proposed acquisition of Cray by HPE pursuant to the terms of an
Agreement and Plan of Merger by and among, HPE, Cray Merger Sub, Inc., a
wholly owned subsidiary of HPE, and Cray. Cray and its directors,
executive officers and other members of its management and employees,
under SEC rules, may be deemed to be participants in the solicitation of
proxies of Cray shareholders in connection with the proposed
transaction. Information concerning the interests of Cray’s participants
in the solicitation, which may, in some cases, be different than those
of Cray’s shareholders generally, are available in Cray’s proxy
statement for its 2019 annual meeting of shareholders, which was filed
with the SEC on April 18, 2019. To the extent holdings of securities by
Cray’s directors or executive officers have changed since the amounts
disclosed Cray’s respective proxy statement, such changes have been or
will be reflected on Statements of Change in Ownership on Form 4 filed
with the SEC. Additional information regarding these persons and their
interests in the proposed transaction will be set forth in the
definitive proxy statement relating to the proposed transaction when it
becomes available. These documents are available free of charge at the
SEC’s web site at www.sec.gov
or by going to Cray’s website at www.cray.com.

Forward-looking Statements

This document contains forward-looking statements within the meaning of
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Such statements involve risks, uncertainties and
assumptions. If such risks or uncertainties materialize or such
assumptions prove incorrect, the results of HPE and its consolidated
subsidiaries or of Cray could differ materially from those expressed or
implied by such forward-looking statements and assumptions. All
statements other than statements of historical fact are statements that
could be deemed forward-looking statements, including, but not limited
to, any statements regarding the expected benefits and costs of the
transaction contemplated by this document; the expected timing of the
completion of the transaction; the ability of HPE, its subsidiaries and
Cray to complete the transaction considering the various conditions to
the transaction, some of which are outside the parties’ control,
including those conditions related to regulatory approvals; projections
of revenue, expenses, net earnings, operating profit, cash flows, or
other financial items; the expectation of the combined company having
the opportunity to drive the next generation of high performance
computing and play an important part in advancing the way people live
and work; the expected size of the HPC segment of the market and
associated storage and services in 2021; the opportunity to bring
together Cray and HPE to provide customers unique supercomputing
technology; the belief that the agreement maximizes Cray’s value for its
shareholders and the unique combination’s opportunities for both
employees and customers; the expected strengthening of HPE’s portfolio
by leveraging Cray’s solutions; the expectations relating to the
combined company’s reach to a broader set of end markets; the
expectations relating to the combined company’s enhanced opportunities
for growth and the integrated platform to lead the Exascale era of high
performance computing; the expectation that the combined company will
deliver significant customer benefits; the expectation that significant
economic upside will be realized from the combination; the expectation
that the combined company’s enhanced financial profile; the expectation
that the combined company will drive significant revenue growth
opportunities; statements regarding the delivery of significant cost
synergies to lower costs and improve product performance; the
expectation that the transaction will be accretive to HPE non-GAAP
operating profit and earnings in the first full fiscal year following
close; HPE’s expectation to incur one-time integration costs that will
be absorbed into HPE’s FY20 free cash flow outlook of $1.9B to $2.1B
that remains unchanged; the expected closing timing; any statements
concerning the expected development, performance, market share or
competitive performance relating to products or services; any statements
regarding current or future macroeconomic trends or events and the
impact of those trends and events on HPE or Cray and such companies’
financial performance; any statements of expectation or belief; and any
statements of assumptions underlying any of the foregoing. Risks,
uncertainties and assumptions include the possibility that expected
benefits may not materialize as expected; that the integration of the
acquisition post-closing may not occur as anticipated, and the combined
companies’ ability to achieve the growth prospects and synergies
expected from the transaction, as well as delays, challenges and
expenses associated with integrating the combined companies’ existing
businesses may incur; that the transaction may not be timely completed,
if at all; that, prior to the completion of the transaction, Cray’s
business may not perform as expected due to transaction-related
uncertainty or other factors; the effect of the announcement or pendency
of the transaction on Cray’s business relationships, operating results,
and business generally; that the parties are unable to successfully
implement integration strategies; the need to address the many
challenges facing Cray’s and HPE’s businesses; the competitive pressures
faced by the businesses; risks associated with executing strategy; the
impact of macroeconomic and geopolitical trends and events; the
development and transition of new products and services and the
enhancement of existing products and services to meet customer needs and
respond to emerging technological trends and other risks that are
described in the SEC reports of HPE and Cray, including but not limited
to the risks described in HPE’s Annual Report on Form 10-K for its
fiscal year ended October 31, 2018, and subsequent quarterly reports on
Form 10-Q, Cray’s Annual Report on Form 10-K for its fiscal year ended
December 31, 2018 and subsequent quarterly reports on Form 10-Q, and
that are otherwise described or updated from time to time in other
filings with the SEC. HPE and Cray assume no obligation and do not
intend to update these forward-looking statements.

1 Source: Market data as of October 5, 2018



Editorial contact
Holderness, HPE

Investor Relations contact
Simanek, HPE


Editorial contact
Brodskiy, Bhava Communications for Cray

Investor Relations contact
Hiemstra, Cray

error: Content is protected !!