Rackable Systems Announces Agreement to Acquire Silicon Graphics Inc.
01 April 2009 - 10:49PM
Business Wire
Rackable Systems, Inc. (NASDAQ:RACK), a leading provider of
servers and storage products for medium to large-scale data
centers, today announced its agreement to acquire substantially all
the assets of Silicon Graphics, Inc. (SGI) (NASDAQ:SGIC) for
approximately $25 million in cash, subject to adjustment in certain
circumstances, plus the assumption of certain liabilities
associated with the acquired assets.
The combined businesses will provide customers with market
leading hardware and software technology within large-scale x86
cluster computing, HPC, Internet, Cloud Computing, large-scale data
storage environments and visualization platforms across many
verticals and geographies. This combination is also expected to
result in a stronger global services organization; reaching
commercial, government and scientific sectors on a worldwide
basis.
�The combined company will be positioned to solve the most
demanding business and technology challenges our customers confront
today,� said Mark J. Barrenechea, president and CEO of Rackable
Systems. �In addition, this combination gives us the potential for
significant operational synergies, a strong balance sheet, and
positions the combined company for long-term growth and
profitability.�
�We have been working very hard to strengthen our company, and
today, we�ve taken another big step in that direction,� stated
Robert �Bo� Ewald, CEO of Silicon Graphics. �This transaction
represents a compelling opportunity for Silicon Graphics�
customers, partners and employees, who can all benefit from the
emerging stronger company with better technologies, products and
markets reach.�
Barrenechea added, �Together, we believe we will be a much
stronger entity with great products and people offering a
compelling proposition to compete more effectively in, and across,
our collective markets.�
Rackable has signed an Asset Purchase Agreement to acquire
substantially all the assets of SGI, and to assume certain
liabilities relating to the assets, pursuant to Chapter 11 of the
U.S. Bankruptcy Code, under which SGI filed its petition in New
York on April 1, 2009. Completion of the transaction is subject to
a number of closing conditions, including the approval of the
Bankruptcy Court, and other uncertainties. Subject to such
conditions and uncertainties, the transaction is expected to close
within approximately 60 days. It is expected that SGI�s business
operations will continue during the pre-closing period. SGI�s
international operations would be part of the sale, but would not
be part of the bankruptcy process.
Rackable also announced today that it had suspended its
previously announced program including the repurchase of up to $40
million of the company�s stock.
Conference Call Information
Rackable Systems will discuss the intent to acquire SGI in a
conference call at 2:00 p.m. PST today. The public is invited to
listen to a live web cast of the call on the Investor Relations
section of the Rackable�s website at investors.rackable.com. A replay of the
webcast will be available approximately two hours after the
conclusion of the call and remain available until the next earnings
call. An audio replay of the conference call will also be made
available approximately two hours after the conclusion of the call.
The audio replay will remain available for five days and can be
accessed by dialing 1-719-457-0820 or toll free 888-203-1112 and
entering the confirmation code: 6691284.
About Rackable Systems
Rackable Systems, Inc. (NASDAQ:RACK) is a leading provider of
Eco-Logical� servers and storage for medium- to large-scale data
center deployments. Rackable�s products, available for purchase or
lease, are designed to provide benefits in the areas of density,
thermal efficiency, serviceability, power distribution, data center
mobility and remote management. Founded in 1999 and based in
Fremont, California, Rackable Systems is a founding member of The
Green Grid and serves cloud computing and services, enterprise
software, federal government, digital media, financial services,
oil and gas exploration and HPC customers worldwide. Additional
information available at www.rackable.com.
About Silicon Graphics Inc (SGI)
SGI (NASDAQ:SGIC), is a leader in high-performance computing.
SGI delivers a complete range of high-performance server,
visualization, and storage solutions along with industry-leading
professional services and support that enable its customers to
overcome the challenges of complex data-intensive workflows and
accelerate breakthrough discoveries, innovation and information
transformation. Headquartered in Sunnyvale, California, the company
can be found on the Web at www.sgi.com.
Cautionary Statement Regarding Forward Looking
Statements
This press release contains forward-looking statements,
including statements regarding the proposed acquisition,
anticipated product performance, general business outlook and
projected results of operations. Any statements contained herein
that are not statements of historical fact may be deemed
forward-looking statements. Actual results may differ materially
from forward-looking statements due to a number of risks and
uncertainties including: the risk that the bankruptcy court may not
approve the proposed acquisition; negotiations with SGI or
conditions to closing of the acquisition may fail; competing
parties may outbid Rackable in the bankruptcy proceedings;
liabilities assumed by Rackable in the acquisition may be greater
than anticipated; key personnel may not remain with Rackable
following the closing; the anticipated synergies of the combined
companies and the potential cost reductions may not be achieved;
and the combined operations may not be successfully integrated in a
timely manner, if at all. Detailed information about other
potential factors that could affect Rackable Systems' business,
financial condition and results of operations is included in
Rackable Systems' annual report on Form 10-K under the caption
"Risk Factors," in Part I, Item 1A of that report, filed with the
Securities and Exchange Commission ("SEC") on March 19, 2009, as
updated by Rackable Systems' subsequent filings with the SEC, all
of which are available at the SEC's Web site at http://www.sec.gov.
You are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date of this report.
Rackable Systems undertakes no responsibility to update the
information in this report.
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