Today marks a significant milestone in our Company’s history, as we have signed a definitive agreement to be acquired by Hewlett Packard Enterprise (HPE).
Since the founding of Cray Research in 1972 by the legendary Seymour Cray, we have focused on building some of the fastest supercomputers on the planet so that leading visionaries can keep asking questions that challenge the limits of possibility. From the first Cray-1 in 1976, to the Cray T3E in 1996, to the Cray XC series currently deployed at over 100 organizations around the world, Cray has been a leader in the supercomputing industry for over four decades. Today, Cray supercomputers power over 80% of the world’s global weather centers, perform vital upstream exploration in the energy industry, design, test and perform safety analysis on cars (from a Formula 1 race car to your family sedan) and help research centers around the world achieve breakthroughs that change our world. We partner with our customers to help them achieve their mission and business goals — and I want to thank them for this deep partnership over the years.
Today we find ourselves at the threshold of a new era in the industry – the Exascale era. The promise of Exascale is more than a single gigantic supercomputer or a performance milestone. It is the ability to take advantage of the explosion of disparate data with increasingly complex modeling, simulation, analytics and artificial intelligence to drive new discovery, innovation and insights. This combination of data and compute-intensive workloads operating at extreme scale, and often in real-time, exceeds the capabilities of today’s datacenter infrastructure. Exascale computing systems and technologies will allow scientists and engineers to overcome these barriers and produce the world’s next breakthroughs.
We saw signs of the coming changes and began developing our Shasta supercomputer and Slingshot interconnect several years ago. Our Shasta supercomputing architecture is an entirely new design, built from the ground up to address the needs of the Exascale era. It enables a diversity of processor technologies, supports converged, heterogeneous workloads, eliminates the distinction between supercomputers and clusters, and fuses the performance and scale of a supercomputer with the productivity of the cloud. Slingshot is different than any interconnect we, or anyone else, has ever built. In addition to high speed and low latency, Slingshot incorporates intelligent features that enable diverse workloads to run simultaneously across the system. It includes novel adaptive routing, quality-of-service and congestion management capabilities while providing full Ethernet compatibility. Shasta and Slingshot are the basis of three recent seminal wins at the U.S. Department of Energy, powering a pre-Exascale supercomputer as well as the first two Exascale systems in the United States. Shasta hasn’t even started shipping yet and is quickly approaching $1B in new wins!
While these recent wins validate our belief in our next generation products as well as the wide range of opportunities they will open for us, we continue to face the challenge of scale. At our core, Cray is an engineering company and we have always aspired to be an innovation leader and to see our unique technologies deployed in organizations around the world. We continually walk the delicate balance between investing in our future, providing exemplary service to our customers, rewarding our employees and increasing shareholder value. After weighing all the relevant factors, our Board concluded that this acquisition makes sense for all of our stakeholders – shareholders, customers and employees.
From our discussions with HPE’s leadership, it has become clear that HPE is a great partner. We believe that the combination of Cray and HPE creates an industry leader in the fast-growing High-Performance Computing and AI markets and creates a number of opportunities that neither company would likely be able to capture on their own.
- Shasta, Slingshot and ClusterStor. We are excited about integrating the Shasta system architecture, software, programming environment, Slingshot and ClusterStor technologies across HPE’s broad product portfolio and advanced research programs.
- Global distribution reach. With HPE’s massive scale and global distribution, we see an opportunity to increase our customer base by an order of magnitude within a few years. With HPE’s cross-industry enterprise relationships, we anticipate rapid adoption of Cray technology into a much broader HPC and AI customer base.
- Continued innovation. We have an exciting roadmap with more possibilities than we can reasonably fund. Our market opportunities are expanding with Shasta and Slingshot. The ability to invest in that roadmap will be significantly bolstered by HPE’s scale and financial strength, as well as their product breadth and exciting technologies.
- Continued commitment to customer service. Our reputation for unparalleled customer service has been key to our success, and the combined company will continue to be committed to the support experience that is at the center of our customers’ success.
Additional Information and Where to Find It
In connection with the proposed transaction, Cray will file relevant materials with the SEC, including a preliminary and definitive proxy statement. Promptly after filing the definitive proxy statement, Cray will mail the definitive proxy statement and a proxy card to Cray shareholders of the Company. CRAY SHAREHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) CAREFULLY WHEN IT BECOMES AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Cray shareholders will be able to obtain a free copy of these documents, when they become available, at the website maintained by the SEC at www.sec.gov or free of charge at www.cray.com/company/investors.
Participants in the Solicitation
Additionally, Cray will file other relevant materials in connection with the proposed acquisition of Cray by HPE pursuant to the terms of the agreement and plan of merger. Cray and its directors, executive officers and other members of its management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies of Cray shareholders in connection with the proposed transaction. Cray shareholders may obtain more detailed information regarding the names, affiliations and interests of certain of Cray’s executive officers and directors in the solicitation by reading Cray’s most recent Annual Report on Form 10-K, which was filed with the SEC on February 12, 2019 and the proxy statement for Cray’s 2019 annual meeting of shareholders, which was filed with the SEC on April 18, 2019. To the extent holdings of securities by Cray’s directors or executive officers have changed since the amounts disclosed in each company’s respective proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. These documents are available free of charge at the SEC’s web site at www.sec.gov or by going to Cray’s Investor Relations website at https://www.cray.com/company/investors. Information concerning the interests of Cray’s participants in the solicitation, which may, in some cases, be different than those of Cray shareholders generally, will be set forth in the definitive proxy statement relating to the proposed transaction when it becomes available.
All statements included or incorporated by reference in this communication, other than statements or characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on Cray’s beliefs and assumptions and on information currently available to Cray. In some cases, you can identify forward-looking statements by terms such as words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “goals,” “likely,” “might,” “project,” “target,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” and similar expressions intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, and examples of forward-looking statements include, without limitation, any statements regarding the expected benefits and costs of the proposed transactions contemplated by the definitive agreement relating to the acquisition of Cray by HPE; the ability of HPE, Merger Sub and Cray to complete the proposed transaction considering the various conditions to the proposed transaction, some of which are outside the parties’ control, including those conditions related to regulatory approvals; the belief that the proposed transaction will drive continuous innovation and enable Cray’s customers to harness the power of supercomputing; the belief that Exascale computing and technologies will allow scientists and engineers to achieve their mission and business goals and produce the world’s next breakthroughs; the belief that Cray’s next generation products will provide customers with unique technology to address their needs; the belief that the combination of Cray and HPE creates an industry leader in High Performance Computing and AI markets and creates opportunities that neither company could capture on its own; the potential integration of Cray’s Shasta, Slingshot and ClusterStor technologies across HPE’s portfolio; the belief that Cray will have the opportunity to increase its customer base by an order of magnitude within a few years; the anticipated rapid adoption of Cray technology into the HPC and AI customer base; the possibilities in Cray’s roadmap; the expectation that the market opportunity will expand with Shasta and Slingshot; the belief that Cray will be able to invest in the roadmap with HPE; that the combined company will continue to be committed to support the customer experience; the belief that the combined companies will create a better future for Cray’s customers, employees and all of Cray’s stakeholders; and any statements of belief and any statement of assumptions underlying any of the foregoing. Actual results or events could differ materially from those anticipated in these forward-looking statements for many reasons, including, among others, the following: the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the approval of the merger agreement by Cray shareholders and the receipt of certain governmental and regulatory approvals; the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; the effect of the announcement or pendency of the proposed transaction on Cray’s business relationships, operating results and business generally; risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction; integration of the acquisition post-closing may not occur as anticipated, and the combined companies’ ability to achieve the growth prospects and synergies expected from the transaction, as well as delays, challenges and expenses associated with integrating the combined companies’ existing businesses may incur; attempts to retain key personnel and customers and gain new customers may not succeed; that the anticipated integration of HPE and Cray products, systems and technology may not occur as anticipated or be delayed; risks related to diverting management’s attention from Cray’s ongoing business operations; the outcome of any legal proceedings that may be instituted against Cray related to the merger agreement or the proposed transaction; unexpected costs, charges or expenses resulting from the proposed transaction; there may be negative changes in general economic conditions; and the other risks described in the “Risk Factors” section of Cray’s Annual Report on Form 10-K for the year ended December 31, 2018 and filed with the SEC on February 12, 2018 and Cray’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 filed with the SEC on May 7, 2019, and other sections of such reports and Cray’s other filings with the SEC. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this communication. You should read this communication completely and with the understanding that actual future results and events may be materially different from what we expect. We assume no obligation to update these forward-looking statements, whether as a result of new information, future events, or otherwise.