SMART Global Holdings, Inc. announced that it has acquired Penguin Computing, Inc., a privately held company and a leader in specialty compute and storage solutions targeting applications in Artificial Intelligence (AI), Machine Learning (ML) and High-Performance Computing (HPC) using state-of-the-art, open technologies and advanced industry architectures. Penguin’s compute and storage solutions are also available on a secure cloud infrastructure.
Accoring to a regulator filing the company entered into an Incremental Facility Amendment to its second and restated credit agreement dated as of August 9, 2017 among SMART Worldwide Holdings, Inc., Barclays Bank PLC, as Administrative Agent and the other lenders party thereto. The Incremental Facility Amendment provides for, among other things, an incremental $60.0 million term loan facility. On June 8, 2018, the Company borrowed pursuant to the Incremental Facility Amendment $60.0 million in aggregate principal amount of Additional Term B Loan under the Credit Agreement, a portion of which was used to fund the cash purchase price of the Merger. The terms and provisions of the Additional Term B Loan are, in all material respects, substantially consistent with the terms and provisions of the other term loans currently outstanding under the Credit Agreement.
KKR Credit provided the debt financing for this transaction. Needham & Company, LLC acted as financial advisor to SMART.
Penguin will continue as a standalone operation being the first part of a new business unit, SMART Specialty Compute & Storage Solutions (SCSS), which will benefit from shared infrastructure and the ability to leverage the products and capabilities of SMART’s Specialty Memory business unit into the emerging AI and ML markets. The acquisition of Penguin and the creation of SMART SCSS will serve as a broad platform on which SGH can further build.
“We are pleased to be embarking on the first acquisition of our strategy to broaden the reach and capabilities of SMART into new technologies, markets and channels that leverage our proven platform of integrating and growing businesses,” commented Ajay Shah, Chairman and CEO of SMART Global Holdings. “Penguin brings an outstanding customer base, solid products and strong supplier relationships to SMART in the specialty compute, storage and networking markets.”
Tom Coull, CEO of Penguin, stated, “We are looking forward to becoming a part of the SMART family of global companies and will continue to deliver Penguin branded high quality, cost effective, purpose-built servers, storage and networking solutions for our customers. With this new platform, Penguin will have substantially improved access to capital to drive additional investment in, and further development and growth of our product and services offerings. Based on all of the benefits that we anticipate from this transaction, we expect that our customers and suppliers will be supportive of the transaction.”
SMART has agreed to acquire Penguin for up to $85 million, which includes up to $25 million of performance-based payments that are made only if certain agreed-upon targets are achieved.