HPE acquiring supercomputing giant Cray for $1.3 billion

Hewlett Packard Enterprise (NYSE:HPE) and Cray Inc. (NASDAQ:CRAY), a global supercomputer expert, 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.

Acquiring Cray strengthens and expands HPE’s High Performance Computing (HPC) technology portfolio, the company says. Per an HPE statement, "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 say they will have enhanced opportunities for growth and the integrated platform, scale and resources to lead the Exascale era of high performance computing."

Cray is known as 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.

“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,” says 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’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.

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.

U.S. Department of Energy and Intel to Deliver First Exascale Supercomputer (March 18, 2019)

HPE reckons that 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.

“Answers to some of society’s most pressing challenges are buried in massive amounts of data,” says 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.”

In summary, the companies say 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's GreenLake platform, a comprehensive end-to-end portfolio of HPC infrastructure – from computing components, high-performance storage, system interconnects, and software and services supplementing existing HPE capabilities to address the full spectrum of customers’ data-intensive needs. Customers will also benefit from differentiated next-generation technology addressing data intensive workloads; increased innovation and technological leadership from leveraging greater scale; the company's combined talent and expanded technology capabilities; and enhanced supply chain capabilities leveraging US-based manufacturing.

As notably explained in the following video, on April 30th, 2019, Hewlett Packard Enterprise also officially opened the doors to its newly constructed corporate headquarters in San Jose, California.