HPE Buying Supercomputer Specialist SGI for $275M

(Bloomberg) -- Hewlett Packard Enterprise is buying Silicon Graphics International for about $275 million in cash, adding high-performance computing capabilities that improve data analytics.

HPE expects the deal to be neutral to earnings in the first full year and will add to profit thereafter, the companies said Thursday in a statement. SGI, whose machines helped create advanced computer-generated images for Hollywood movies in the 1990s, brings products that aid customers with computing, data analytics and data management.

"At HPE, we are focused on empowering data-driven organizations," said Antonio Neri, the company’s executive VP and general manager for the enterprise group, in the statement. Its technology will "complement HPE’s proven data center solutions designed to create business insight."

CEO Meg Whitman is investing in products that help customers crunch growing reams of data. The high performance computing industry, an $11 billion market, is expected to have a compound annual growth rate of 6 percent to 8 percent in the next few years, according to industry researcher IDC, the company said.

SGI’s operating assets were sold to Rackable Systems in 2009 for $42.5 million. Rackable took on SGI as its global name and brand. Shares in SGI surged 28 percent in late trading in New York to $7.65. They had fallen more than 70 percent from a peak in August 2013.

The agreement with HPE will support private and public sector customers, including US federal agencies as well as companies.

The two companies are complementary, said Jorge Titinger, CEO and president of SGI, in the statement. “This combination addresses today’s complex business problems that require applying data analytics and tools to securely process vast amounts of data."

The deal, whose per-share price is $7.75, is expected to close in the first quarter of HPE’s fiscal year 2017.

See also: HPE Wants to Give Data Center Automation a Fresh Start