SMART Global Holdings (SGH) has announced that it has entered into a definitive agreement with affiliates of Siris Capital Group, LLC, to acquire Stratus Technologies, a global leader in simplified, protected, and autonomous computing solutions in the data center and at the Edge.
Under the terms of the agreement, SGH will pay $225 million in cash at closing and an earn-out payment of up to $50 million, based on the gross profit performance of the Stratus business during the first full 12 fiscal months of Stratus following the closing.
Consistent with the Company’s existing lines of business, Stratus delivers differentiated technology solutions to specialty end markets. In particular, the addition of Stratus’ high-availability, fault-tolerant computing platforms, software, and services will expand the Company’s Intelligent Platform Solutions (“IPS”) business to better serve Stratus and IPS customers worldwide.
“This transaction builds upon our successful track record of M&A at SGH,” said Mark Adams, CEO of SGH. “The high-availability and fault-tolerant capabilities of Stratus will expand our IPS offerings in Edge, Core, and Cloud, and will enable us to more comprehensively address our combined customers’ needs. We look forward to welcoming the Stratus team to SGH.”
Strategic and Financial Benefits
- Diversified solutions in the data center and at the Edge: Stratus’ high-availability and fault-tolerant platforms, software, and services expand IPS’ technology offerings.
- Large-scale global customer base: Stratus has a strong global customer base, including more than half of the Fortune 100 companies.
- Differentiated technology: Stratus offers differentiated products and services, consistent with SGH’s focus on providing value-add solutions for specialty end markets.
- Comprehensive services: Stratus’ services capabilities and infrastructure will result in adding more than $80M of higher margin, recurring revenue for IPS.
- Strong financial profile expected to be immediately accretive: The transaction is expected to be immediately accretive to gross margin, non-GAAP EPS, and free cash flow.
“By joining SGH, we significantly expand our customer reach and capabilities to deliver data center and Edge solutions and services, enabling our customers to run their most important mission-critical applications,” said Dave Laurello, President and CEO of Stratus. “We are excited to join SGH, and look forward to contributing to the company’s growth. Their operating model and acquisition strategy offer tremendous opportunity to our customers, partners, and employees.”
Following the close of the transaction, which is expected to occur in the second half of calendar year 2022, SGH expects to incorporate the Stratus brand and trademarks into the SGH portfolio of businesses and will operate Stratus under its Intelligent Platform Solutions Group.
