Kalray Into Negotiations to Acquire Arcapix

Kalray SA has entered into exclusive negotiations for the acquisition of 100% of the shares of Arcapix Holdings Ltd, a provider of SDS and data management solutions for data-intensive applications, operating under 2 brands – Pixitmedia and Arcastream.
 
This project of acquisition is aligned with its development strategy, complimenting its products, team, expertise and markets, and contributing to speed up the go-to-market of Kalray’s solutions.

This strategic transaction would:
• Strengthen position as an innovative player in the growing storage and intelligent data processing market
• Accelerate the market penetration of acceleration cards and storage solutions
• Give access to a broad customer base, leading organizations and strategic resellers operating within core markets (M&E, HPC, AI, life sciences, and others)
• Complement customer propositions and skillset and produce cross-selling opportunities for Flashbox AFA and K200-LP acceleration cards
• Represent a change of dimension (+ >50 R&D, sales and support professionals in the UK and US)
• Add a profitable business, Arcapix is expected to positively impact top and bottom line.

Eric Baissus, president and CEO of Kalray said: “I am delighted at the prospect of this acquisition that will accelerate our go-to-market and strengthen our key position in the data-intensive storage market. It is perfectly aligned with Kalray’s development strategy and ambition, complimenting our products, team, expertise and markets. With this acquisition, we would gain new clients and strategic partners to propel our business forward. We have been impressed by the 2 founders, Ben, Barry and their team and by what they have managed to achieve in the last few years. I am looking forward to working closely with them to achieve our ambition to become a leading provider of solutions for a more intelligent, effective and user-friendly data-driven world.”

Ben Leaver, Arcapix co-founder and CEO, said: “We are excited at the prospect of joining the Kalray family. We have come to trust and respect its leadership, and we have high hopes about its ambitious vision and breakthrough technology. The 2 companies believe that together they can build and superior products with compelling value to customers. As data increasingly shapes the modern business, managing it becomes ever more critical and faces growing demands for performance, scalability, and flexibility. They have a track record in meeting such demands. Together with Kalray, they will be able to move to the next level, both technologically and commercially.”

Arcapix is a UK-headquartered company that offers high-performance storage and data management solutions for intensive and critical data.

It was founded in 2013 by Ben Leaver and Barry Evans. It operates under the brands Pixitmedia and Arcastream, that serve the demanding storage verticals of M&E, AI, life sciences, engineering and scientific research. These industries are among the fastest-growing storage segments with a CAGR estimate of over 20% for the next 5 years[2].

Its products are trusted by some leading organizations within their field. Some have being publicly announced such as Framestore, Red Bee Media, and Imperial College London. They are sold directly or through reseller partners such as Dell Technologies.

It reported a positive EBITDA[3] and achieved an annual turnover of approximately €7 million during its last fiscal year (as of March 2021)[4].

As technologies such as AI, 5G, video streaming, and analytics proliferate and produce massive amounts of data, there is a growing need for fast, flexible, ubiquitous and cost-effective storage solutions to handle this deluge. It creates tremendous market opportunities for companies that can combine innovations in both software and hardware to create new ways to generate, analyze, manage and deploy data.

Arcapix has developed a high-performance software storage solution. It combines flash, disk, tape, and cloud storage into a multi-protocol, unified system. It’s fast, limitlessly scalable, easily manageable, and more cost-effective than alternative solutions. It also allows customers to transparently manage their data from anywhere, in a single namespace. This capability is critical as boundaries between cloud, edge, and on-premise locations become increasingly blurred.

Kalray provides high compute, low power, programmable acceleration cards based on its patented family of data processors (DPU). Last year, it announced the commercial availability of its new storage acceleration card, the K200-LP that targets the data-intensive storage market. It recently announced the availability of a NVME storage array, the Flashbox. Co-developed with Viking Enterprise Solutions, a division of Sanmina Corporation, Flashbox is a solution with performance and cost advantages to customers switching to NVMe storage.

By offering its acceleration cards with Arcapix’s software products, Kalray will deliver all the building blocks needed for the next gen of intelligent data appliances and infrastructures.

This contemplated acquisition fits with Kalray’s ambition to scale up significantly its business, accelerate its go-to-market plans and expand cross selling opportunities.

With this contemplated acquisition, Kalray would start a change in dimension. As of today, the Arcapix team includes more than 50 employees, including experts in storage solutions and data-intensive applications. The team includes a sales and support force of more than 30 people worldwide.

This contemplated acquisition would give access to new markets opportunities for Kalray, in 3 of data-intensive industries: media, AI and scientific research.

With this contemplated acquisition, Kalray would also have access to Arcapix’s customer portfolio and its set of strategic resellers including Dell Technologies. Arcapix will continue serving its existing customers through its current product portfolio while integrating its NVMe acceleration cards and Flashbox into its solutions.

Kalray contemplates to acquire 100% of the capital of Arcapix shares for a maximum amount of 464,770 its shares[5] and €0.9 million paid in cash subject to closing adjustments. By way of illustration, a shareholder holding 1.00% of Kalray’s current share capital before the completion of the contemplated acquisition would hold a participation of 0.93% if all the above mentioned Kalray shares were eventually issued to the sellers.

The signing of the definitive documentation, which would be announced by a press release, is expected to take place in 1Q22, after consultation with Kalray’s works council (comité social et économique) and subject to the final agreement of the parties on the terms of the transaction. Financial audit has already been carried out and legal audit is ongoing. The completion of the transaction would be subject to customary conditions and the approval of the shareholders’ general meeting of Kalray. This later will keep the market updated of the next steps.

The vote of the shareholders’ meeting will focus in particular on the resolution necessary for the implementation of this acquisition project and in particular the issuance of shares necessary for its realization.

The report of the contribution auditor will be made available to shareholders prior to the holding of the general meeting.
 
[1] The completion of the transaction would be subject to customary conditions and the approval of the shareholders’ general meeting of Kalray.
[2] Allied Market Research, 2021.
[3] EBITDA: Earnings before interests, taxes, depreciation, and amortization.
[4] Unaudited data.
[5] At closing, 73,384 shares would be issued to the sellers and the balance of the purchase price of up to 391,386 additional shares will be paid in several deferred instalments over 3 years depending on the presence of the founders and completion of performance objective. The price per share that would be used in the acquisition would be equal to €36.12 (the volume-weighted average price of the shares of Kalray over the 180-trading-day period immediately preceding the signature of the non-binding tem sheet related to the contemplated transaction).