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Rackable to Acquire Silicon Graphics for $25M

By Antone Gonsalves, InformationWeek

Rackable Systems, a maker of server and storage for medium to large data centers, said Wednesday that it has agreed to buy struggling computer maker Silicon Graphics for $25 million in cash. The deal was announced the same day Silicon Graphics filed for federal bankruptcy protection in New York.

The deal would add to Rackable's product line Silicon Graphics' portfolio of servers and software for building x86 clusters for high-performance computing, cloud computing, and large-scale data storage. Silicon Graphics also would boost Rackable's global service operations for the commercial, government, and scientific sectors.

"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," Mark J. Barrenechea, president and chief executive of Rackable, said in a statement.

Under the deal, Rackable acquires all of Silicon Graphics' assets and assumes some liabilities related to the bankruptcy filing. The agreement, which is subject to approval of the U.S. Bankruptcy Court, is expected to be completed in about 60 days, pending an auction that could lead to higher bids. Rackable's offer represents a 15% premium over Silicon Graphics' closing stock price on Tuesday.

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