Hewlett Packard Enterprise (NYSE:HPE) (‘HPE') entered into a definitive agreement to acquire Cray Inc. (NasdaqGS:CRAY) for approximately $1.5 billion on May 16, 2019. HPE will pay $35 per Cray share in cash. Each Cray stock option that is vested will be cancelled in exchange for an amount in cash equal to, for each share of Cray common stock underlying such option, the excess of $35 over the exercise price per share. Each Cray stock option that is unvested will be converted into an HPE stock option and will otherwise remain subject to the same terms and conditions based on the per share consideration. Each Cray restricted stock unit that is vested will be cancelled in exchange for $35 in cash and each Cray restricted stock unit that is unvested will be converted into an HPE restricted stock unit and will otherwise remain subject to the same terms and conditions. Each Cray performance-based restricted stock unit award will be converted into an HPE restricted stock unit award and for purposes of such conversion, the number of shares of Cray common stock underlying the award shall be deemed to equal 50% of the number of shares covered by the award immediately prior to the closing time. Upon closing, Cray Inc. will become a wholly owned subsidiary of Hewlett Packard Enterprise.

The transaction would be financed from the net proceeds of Hewlett's notes offering, together with cash on hand and the proceeds of an expected offering of asset-backed notes of up to $1.2 billion supported by receivables arising under loan contracts and lease contracts, and related interests. Cray may be required to pay HPE a fee of $46 million in the event of termination of the transaction under certain circumstances. In connection with the transaction, Peter J. Ungaro, President and Chief Executive Officer of Cray Inc. entered into an employment agreement with HPE. The consummation of the transaction is subject to regulatory approvals, approval of the agreement by holders of not less than a majority of the outstanding shares of Cray common stock and expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is not subject to a financing condition. The special meeting of Cray's shareholders to vote on the approval of the merger agreement is scheduled to be held on August 27, 2019. The Boards of Directors of Cray and HPE have unanimously approved the agreement. The Board of Cray based on a recommendation of a financial advisor, has resolved to recommend that the Cray shareholders vote to approve the agreement. On June 14, 2019, Cray and HPE filed their respective notification and report forms pursuant to the HSR Act with the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission.

On July 12, 2019, Cray and HPE filed their respective notifications with the German Federal Cartel Office, the Austrian Cartel Act with the Austrian Federal Competition Authority, the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade with the Japan Fair Trade Commission and the Monopoly Regulation and Fair Trade Act of Korea with the Korean Fair Trade Commission. On July 15, 2019, HPE voluntarily withdrew its notification and report form for administrative reasons and refiled it on July 17, 2019. Cray expects that the waiting period under the HSR Act will, absent a second request, expire or be terminated on or before August 16, 2019. On August 8, 2019, the German Federal Cartel Office terminated the applicable waiting period for the merger in Germany, and on August 12, 2019, the Austrian Federal Competition Authority granted clearance with respect to the merger. On August 16, 2019, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired.

On August 23, 2019, the Korea Fair Trade Commission granted clearance with respect to the merger to be effected pursuant to the Merger Agreement. On August 27, 2019, the shareholders of Cray Inc. approved the transaction at the special meeting of shareholders. The requisite waiting period in Japan will expire on September 20, 2019 unless the Japan Fair Trade Commission requests additional information. On September 20, 2019, the requisite waiting period in Japan expired. The transaction is expected to close by the first quarter of HPE's fiscal year 2020. As of August 27, 2019, the transaction is now expected to close by the end of the fourth quarter of 2019, earlier than originally planned. The deal is expected to be accretive to HPE non-GAAP operating profit and earnings in the first full year following the close. HPE expects to incur one-time integration costs that will be absorbed within HPE's 2020 financial year free cash flow outlook.

Andrew R. Brownstein, Benjamin M. Roth and Raaj S. Narayan from Wachtell, Lipton, Rosen & Katz served as legal advisors to HPE. Alan Smith, David Michaels, Stephen Fisher, Chris Gorman, Amy Zhang, Joshua Fuller, Meredith Evancie, James Evans, Katherine Duncan, Brian Cai, Scott Spector, Elizabeth Gartland, Sarah Ghulamhussain, Patrick Grilli, Ralph Pais, Mike Farn, Bryan Kohm, Ed Heffernan, Joseph Schenck, Shitel Chanana, Gina Damiano, Floris de Wit, Julia Chung, Amy Brown, Shizuka Tiernan, Mark Ostrau and Ora Grinberg of Fenwick & West LLP served as legal advisors to Cray. Mike Wyatt and Steve White of Morgan Stanley & Co. LLC served as financial advisors to Cray. Ajay Shah and Thomas Cho of Deutsche Bank Securities Inc. served as the financial advisors to HPE. Scott Freling, Stephen Bartenstein, Joseph Dalia, Nooree Lee, Nigel Howard, Lee Tiedrich, Branden Palmen and Mona Patel of Covington & Burling LLP and Danielle Drory, Nathan Mitchell, Steven Sunshine, Maria Raptis, Andrew Foster, Ivan Schlager and Michael Leiter of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to HPE. Marty Korman, Todd Cleary and Doug Schnell of Wilson Sonsini Goodrich & Rosati acted as legal advisors to Morgan Stanley. MacKenzie Partners, Inc. acted as a proxy solicitor for Cray Inc.

Hewlett Packard Enterprise Company (NYSE:HPE) completed the acquisition of Cray Inc. (NasdaqGS:CRAY) on September 25, 2019. As of the open of business on September 25, 2019, Cray Common Stock, which traded under the symbol “CRAY”, ceased trading on Nasdaq. As part of the acquisition, Cray president and CEO Peter Ungaro, will join HPE as head of the HPC and AI business unit in Hybrid IT. The following members of Cray's board of directors resigned effective as of the effective time Peter J. Ungaro, Prithviraj Banerjee, Catriona M. Fallon, Stephen E. Gold, Stephen C. Kiely, Sally G. Narodick, Daniel C. Regis, Max L. Schireson and Brian V. Turner.