HPE Buys Cray
- All-cash deal for $35/share
- Cray recorded a net loss of $29m in Q1
- Deal comes in the wake of Cray’s $500m “Frontier” contract
HPE has agreed to buy supercomputer specialist Cray for $1.3 billion cash.
The combined company will create several major revenue opportunities and cost synergies for HPE, it said, not least capitalising on what it estimates to be a $5 billion exascale computing opportunity over the next five years.
Other benefits include the ability to provide new AI offerings, High Performance Computing (HPC)-as-a-Service and cost savings by using Cray’s Slingshot interconnect.
The deal is for $35.00/share and expected to close in Q1, 2020.
Cray’s supercomputing systems, delivered through its 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.
The company also offers 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.
Twenty-eight of Seattle-based Cray’s machines feature in top 100 supercomputer installations around the globe. The company employs 1,300 staff and reported revenue of $456 million in its most recent fiscal year, up 16 percent year-on-year.
— HPE (@HPE) May 17, 2019
HPE Buys Cray: Sees $5 Billion Exascale Opportunity
Antonio Neri, President and CEO, HPE said today: “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.”
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, HPE said, adding that it sees more than $4 billion of Exascale opportunities within five years.
“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 dataintensive needs,” said Peter Ungaro, President and CEO of Cray.
He added: “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 recently announced an Exascale supercomputer contract for over $600 million for the US 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.
GlobalData analyst Chris Drake told Computer Business Review: “HPE is evolving its data center solutions portfolio to enable greater support for new workloads, including AI and other compute, storage and data intensive workloads. Its acquisition of Cray fits well with this strategy and has potential to give HPE a competitive edge going forward.”
He added: “Furthermore, in addition to helping HPE strengthen its focus on academic and government customers, the Cray acquisition provides HPE with an opportunity to further expand the arsenal of its GreenLake flexible capacity business and develop a new HPE-as-a-service offering. However, in addition to the timeframe and the challenges involved in completing the acquisition such as this one, it will likely be a while before HPE can fully leverage the potential opportunities. In the meantime, the HPE-as-a-service concept is one that’s attracting growing investment from public cloud providers such as Microsoft and Google, and from major HPE infrastructure competitors such as Dell EMC.”