HPE TO ACQUIRE SUPERCOMPUTING LEADER CRAY

Combined Company Will Drive Next Generation of High Performance Computing

San Jose, Calif., and Seat­tle, Wash., May 17, 2019 — 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 rate 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 years.

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 Portfolio

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 computing.

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 workloads
  • 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 Combination

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 opportunities
  • 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 GreenLake

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, 2019.

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 atwww.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 share­hol­ders of Cray. CRAY SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Share­hol­ders of Cray will be 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.

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