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World News

SMART Global Holdings acquires Edge Computing provider Stratus for $225 million in Cash

Image Credit: Scott Brownrigg

On June 29 2022, SMART Global Holdings, Inc. (SGH) announced that it has entered into a definitive agreement with affiliates of private equity firm Siris Capital Group, LLC, to acquire Stratus Technologies (Stratus), paying $225 million in cash at the closing of the deal, and an earn-out payment of up to $50 million.

Stratus Technologies, a major producer of fault tolerant computer servers and software, delivers differentiated zero-touch, Edge Computing solutions to specialty end markets.

SGH noted that the addition of Stratus’ high-availability, fault-tolerant computing platforms, software, and services, will expand the Company’s Intelligent Platform Solutions (“IPS”) businesses, to better serve Stratus and IPS customers worldwide.

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Expanding IPS Offerings in Edge, Core, and Cloud

CEO of SGH Mark Adams observed that “this transaction builds upon our successful track record of M&A at 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.”

According to a press release statement by SGH, the firm sees numerous strategic and financial benefits from the acquisition, including the following list:

  • 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.

Dave Laurello, President and CEO of Stratus, also affirmed the benefits Stratus would have from the acquisition, saying that “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.”

“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.”

While the agreement has been approved by the boards of directors of both companies, the transaction is still subject to requisite regulatory approvals and satisfaction of customary closing conditions.

The transaction is expected to close in the second half of calendar year 2022. Following the closing of the deal, SGH expects that it will incorporate the Stratus brand and trademarks into the SGH portfolio of businesses, and will operate Stratus under its Intelligent Platform Solutions Group.

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  • July 1, 2022
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Lois
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