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Sun 19 May 2019 12:01 PM

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HPE agrees to buy supercomputer maker cray for $1.4bn

The deal will help HP Enterprise strengthen its position against IBM

HPE agrees to buy supercomputer maker cray for $1.4bn
The deal could also become HP Enterprise’s biggest since it started trading in 2015, surpassing its acquisition of Nimble Storage Inc. for about $1 billion more than two years ago,

Hewlett Packard Enterprise Co. has agreed to buy US supercomputer maker Cray Inc. in a deal valued at about $1.4 billion as the firm works to become more competitive in high-end computing.

Cray investors will get $35 a share in cash, the companies said in a statement on Friday, confirming an earlier Bloomberg report. That represents a premium of about 17% above Thursday’s closing price. The deal values Cray at $1.3 billion net of cash, the firms said in the statement.

Cray jumped 17% to $34.89 at 9:49 a.m. in New York trading after earlier touching $34.96, the biggest intraday gain in a year. Palo Alto-based HP Enterprise gained about 2% to $14.82.

The deal will help HP Enterprise strengthen its position against International Business Machines Corp. It could also become HP Enterprise’s biggest since it started trading in 2015, surpassing its acquisition of Nimble Storage Inc. for about $1 billion more than two years ago, according to data compiled by Bloomberg.

HP Enterprise has mostly been paring down since it was created from the breakup of Hewlett-Packard Co. In 2017, it completed a spinoff and merger of its enterprise services business with Computer Sciences Corp. It’s also separated some software assets in an $8.8 billion deal with U.K.-based Micro Focus International Plc.

Still, the company has also committed $4 billion through 2022 to initiatives to develop artificial intelligence, the Internet of things and distributed computing offerings. Chief Executive Officer Antonio Neri, who succeeded Meg Whitman last year, said in November that HP Enterprise would start to see a return on that investment over the next two years.

Loss-making Cray traces its roots back to a company founded in 1972 by Seymour Cray, known as the “father of supercomputing.” This month, it signed a deal with the US Department of Energy’s Oak Ridge National Laboratory to build a new $600 million system for research on artificial intelligence, weather, subatomic structures, genomics and physics.

HP Enterprise’s own high-end computer systems are used by the University of Notre Dame, the Pittsburgh Supercomputing Center and chemical giant BASF SE, according to its website. Last year, it won a $57 million contract to provide supercomputers to the US Department of Defense for helicopter design and weather forecasting.

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