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Rackable Systems Announces Agreement To Acquire Silicon Graphics Inc.
2009-04-03
FREMONT, CA and SUNNYVALE, CA., April 1, 2009 - 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.
Contact Information:
Contact Information for Rackable Systems:
Mark Paisley
Senior Director, Investor Relations
Rackable Systems, Inc.
510-933-8382
investorrelations@rackable.com
Contact Information for Silicon Graphics Inc.:
Bob Pette
Silicon Graphics, Inc.
Vice President, Corporate Marketing
408-524-2810
Jen Spark
Schwartz Communications
(415) 512-0770
rackablesystems@schwartz-pr.com
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