SGH to acquire edge hardware provider Stratus Technologies for $225M

SGH to acquire edge hardware provider Stratus Technologies for $225M

Smart Global Holdings have entered a definitive agreement with Siris Capital Group to acquire Stratus Technologies for the company’s expansion into edge computing infrastructure that is easy to deploy, protected from threats, and operates autonomously. SGH will pay $225 million in cash at the closing and an earnout payment of up to $50 million depending on Stratus’ gross profit performance in the first 12 fiscal months following the deal.

SGH said the Stratus offerings will be incorporated into the company’s Intelligent Platform Solutions (“IPS”) division. The acquisition will diversify the company’s solutions in the data center and at the edge with fault-tolerant platforms, software, and services. Stratus’ sizeable global customer base, with more than half of the Fortune 100 companies, will also bring a revenue boost to SGH. The companies expect to add roughly $80M of recurring, high margin services revenue to SGH out of an expected $150M in annual revenue from the Stratus business.

“The high-availability and fault-tolerant capabilities of Stratus will expand our IPS offerings in edge, core, and cloud and enable us to address our combined customers’ needs more comprehensively,” said Mark Adams, CEO at SGH.

While Stratus is known for its hardware offerings, Adams noted that the company’s services revenue was also an important part of SGH’s growth plan, and said on a call with financial analysts “As we think about building out our capabilities and our scale at IPS, the service infrastructure that Stratus brings to our ability to serve our customers and to scale into high-performance compute and edge applications in their customer base is significant.” he noted that the combined services revenue of the two companies would stand at over $150M annually.

Stratus Technologies focuses on providing edge computing infrastructure for digital transformation with fault-tolerance, cybersecurity features, and automated administration. Stratus zTC edge platform offers a zero-touch, secure, and automated edge computing platform, purposely built for the edge ecosystem with self-protecting and self-monitoring features to reduce downtime.

The company recently highlighted strong growth and sales for its zTC edge computing platform. The zTC edge platform and ftServer have also been recognized by the Control Engineering’s 2022 Engineers’ Choice Awards.

“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 offers a tremendous opportunity to our customers, partners, and employees,” added Laurello.

The complete transaction is expected to finish in the second half of 2022, when SGC will incorporate the Stratus ‘brand’ and ‘trademark’ into the SGH portfolio of businesses. Stratus has approximately 500 employees, with 160 in the company’s headquarters in Massachusetts.

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