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SGI buys supercomputer vendor Cray

Silicon Graphics (SGI) put up $576 million in cash today for a majority stake in supercomputer vendor Cray Research.

Silicon Graphics (SGI) put up $576 million in cash today for a majority stake in supercomputer vendor Cray Research.

Silicon Graphics made a cash tender offer of $30 per share for roughly 19.2 million Cray shares, which constitutes about 75 percent of the outstanding Cray stock. After the initial tender offer, which is expected to begin this week, SGI will also exchange one share of its stock for each remaining Cray share.

"The combination of Silicon Graphics and Cray Research will create the world's leading high-performance computing company," said Edward R. McCracken, chairman and CEO of SGI.

The merger agreement weds Silicon Graphics' scalable very-high-performance computing and 3D technologies with Cray's renowned supercomputing know-how. SGI expects that know-how to help it expand the performance of its high-volume, low-cost desktops to the same level as Cray's supercomputers.

The merged company will generate combined revenue of nearly $4 billion.

Over the past 18 months, Cray Research has restructured and refocused its business on the most demanding segments of the high-performance computing market and returned to profitability in the quarter ended last December 31.

Silicon Graphics supplies interactive 3D graphics, digital media, and symmetric multiprocessing supercomputing technologies to technical and commercial environments through direct and indirect sales channels. Its subsidiary MIPS Technologies designs and licenses the company's RISC processor, which is also the leading technology for the computer systems, the interactive consumer, and the embedded control markets.

The merger is expected to be completed in June.