SMART Global Holdings acquired Penguin Computing, a privately held company specializing in compute and storage solutions targeting applications in artificial intelligence (AI), machine learning (ML) and high-performance computing (HPC).

SMART 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.

KKR Credit provided the debt financing for the transaction. According to a related 8-K filing, Barclays acted as administrative agent for the term B loan and Needham as financial advisor to SMART.

Penguin will continue as a standalone operation as 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 the company 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.”