Leading server and data center provider Rackable Systems, Inc. announced today that it will acquire Silicon Graphics, Inc. (SGI) for approximately $25 million in cash.
The combined businesses will offer 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." The companies expect "a stronger global services organization" reaching commercial, government and scientific sectors across the globe.
A collective shudder rippled through Silicon Valley on Wednesday morning, as Rackable Systems announced its purchase of Silicon Graphics Inc. for just $25 million in cash.
If you travel all the way back to 1997, SGI was pulling in close to $4 billion in revenue per year. The company produced some of the flashiest computers on the planet for handling tough graphics jobs. SGI was the next big thing in Silicon Valley, and people adored the company.
"We have been working very hard to strengthen our company, and today, we've taken another big step in that direction," said Robert "Bo" Ewald, CEO of Silicon Graphics, in a statement. "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."
Strengthen indeed. SGI was forced into bankruptcy several years ago, and had filed for bankruptcy again on Wednesday morning.
Here's a look at SGI's balance sheet for Q2 2009:
The acquisition is expected to close in approximately 60 days, and SGI's business operations will likely continue during the pre-closing period.
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.
Rackable shares were down 0.25, or 6.16%, in morning trading.