End Of An Era: Rackable Systems To Buy Silicon Graphics For $25 Million; SGIC Holders Likely To Get Nothing

Today, a legendary Silicon Valley company goes out with a fizzle.

Rackable Systems (RACK) announced that it will buy most of the assets of Silicon Graphics (SGIC), the long-time provider of high-performance computers, for $25 million in cash and the assumption of certain liabilities as part of a pre-packaged Chapter 11 filing by Silicon Graphics. the deal is expected to close within 60 days.

Current SGI shares appear likely to be worthless, according to an 8-K filing by Silicon Graphics:

The assets to be acquired do not include certain non-core patents, which will be retained by SGI. It is expected that the net proceeds of the transaction will be distributed for the benefit of the secured creditors of SGI, and that SGI stockholders will not receive any proceeds in respect of the sale.

Rackable also said it has suspended its previously announced stock repurchase program.

SGIC shares today are down 23 cents, or 56.1%, to 18 cents. Rackable is down 30 cents, or 7.4%, to $3.76.