SGH completes the acquisition of Stratus Technologies

  • August 30, 2022
  • Stratus
  • New

SGH completes the acquisition of Stratus Technologies

SMART Global Holdings, Inc. announced today that it has completed the previously announced acquisition of Stratus Technologies (“Stratus”), a global leader in simplified, protected and autonomous computing solutions in the data center and at the edge.

“We are delighted to welcome the members of the global Stratus team to our SGH family. We see a significant opportunity to expand our portfolio of innovative IT solutions and services with the combination of Stratus and our Intelligent Platform Solutions group. “This transaction is another step in our transformation journey and provides a platform for growth for our customers, partners, employees and shareholders,” said Mark Adams, President and CEO of SGH.

Stratus will operate within SGH Intelligent Platform Solutions (IPS) business group. With its high-availability computing platforms, unique service offerings, and large Fortune 100 customer base, Stratus complements the current IPS portfolio focused on HPC, AI, Edge, and IoT technologies. Together, they will meet industry demand for Edge, Core and Cloud solutions that benefit customers worldwide and unlock additional growth for SGH.

Stratus will continue to be led by Dave Laurello, who has been President and CEO of Stratus since 2000, and will now also serve as SGH’s Senior Vice President of Corporate Development. In this new combined role, Dave will work closely with SGH CEO Mark Adams and IPS President Thierry Pellegrino.

As previously announced, the purchase price payable upon closing of the transaction was $225 million, subject to customary working capital and other adjustments. In addition, SGH will be obligated to pay contingent consideration (if any) of up to $50 million based on the gross margin performance of the Stratus business during Stratus’ first 12 full fiscal months following closing. . The transaction is expected to be immediately accretive to non-GAAP gross margin, non-GAAP EPS and free cash flow.

SGH will provide an update on the acquisition of Stratus during its upcoming quarterly earnings conference call, to be held in October for the company’s fourth quarter and fiscal year 2022 financial results. Details on the schedule and login information for the webcast will be released at a later date.

Additional $300 million term loan

On August 29, 2022, SGH completed an incremental amendment (the “Incremental Amendment”) to its existing credit agreement, dated February 7, 2022, with the lenders parties thereto and Citizens Bank, NA, as administrative agent, collateral agent and an issuing bank (as amended by the Incremental Amendment, the “Amended Credit Agreement”). The Step Amendment provides, among other things, for additional term loans under the Amended Credit Agreement for an aggregate amount of $300 million, with the same terms as the term loans contracted under the initial credit (the “Additional Term Loans”).

Substantially concurrent with the closing of the Incremental Amendment, the Borrowers used a portion of the proceeds of the Incremental Term Loans to (i) fund a portion of the closing purchase price of Stratus and (ii) pay the full amount of $101.8 million outstanding under certain promissory notes, dated June 24, 2022, between CreeLED, Inc. and Wolfspeed, Inc.

The Amended Credit Agreement matures on February 7, 2027. Interest on the loan will be based on a total leverage ratio grid and will initially bear interest at the Term Guaranteed Overnight Funding Rate (“SOFR”) plus 2 .00% in accordance with SGH’s existing pricing schedule at the closing of the acquisition.

About Stratus

For leaders digitally transforming their operations to drive predictable peak performance with minimal risk, Stratus ensures the continuous availability of business-critical applications by providing zero-touch Edge Computing platforms that are simple to deploy and maintain, protected against interruptions and threats, and autonomous. For 40 years, Stratus has provided reliable, redundant contactless computing, enabling global Fortune 500 companies and small and medium enterprises to securely and remotely transform data into actionable intelligence at the edge, cloud and data center. data, improving availability and efficiency. .

About GHS

To GHS, our companies are united by a desire to raise the bar, execute with discipline, and focus on the future of technologies that support and advance the world. Through computing, memory and LED lighting solutions, we build long-term strategic partnerships with our customers. Supported by a proven management team, we operate with excellence around the world while opening new avenues of growth for our business and our industry.

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