French firm Kalray set to merge with Israel-based Pliops to offer advanced data acceleration solutions for storage and AI GPUs

Grenoble, France-based Kalray, a provider of advanced data processing solutions, has announced that it is in negotiations to merge with the Israeli company Pliops.

Ido Bukspan, CEO of Pliops and former SVP of Chip Design at NVIDIA, says, “The potential in this proposed merger between our two companies is tremendous. Combining our technological expertise, teams, and products to make this new entity a global leader will significantly accelerate our time to market with a novel storage paradigm for AI data acceleration solutions.“

The merger

Kalray and Pliops have been working to combine their technologies for several months. Through the merger, the two companies have come together to develop advanced System-on-Chip (SOC) solutions for Generative AI (GenAI) and data storage acceleration.

By combining Pliops’ KV technology with Kalray’s MPPATM architecture, the new entity aims to provide exceptional data processing performance for AI and GenAI applications.

The merger would bring powerful synergies:

• Technologically: The combined company can leverage the strengths of both Pliops and Kalray to provide cutting-edge solutions in Data Acceleration for AI and Storage. This includes optimising Pliops’ intellectual properties (IPs) to enhance the technological value of Kalray’s solutions, addressing the growing demand for data centre acceleration and GPU farms.
• Operationally: Pliops’ technological expertise will significantly bolster the merged company’s capabilities, leading to collaboration, resource sharing, and operational efficiency.
• Commercially: The Kalray group’s presence in Europe and China will be strengthened, and the integration with Hyperscalers in the US market and NGenea will create new business opportunities.
• Financially: The merger will boost the overall valuation of both companies’ activities, creating a more valuable entity in the market.

Kalray to hold majority shares

The proposed merger would involve Pliops’ shareholders contributing 100 per cent of their shares to Kalray in exchange for new shares of Kalray.

Under the proposed terms, Kalray shareholders would hold 65 per cent of the combined entity’s capital, while Pliops shareholders would hold 35 per cent.

As a part of the merger, the current investors in Pliops will become shareholders in the new entity as a result of the merger.

Kalray’s current trading value is approximately $150M. The company plans to issue new shares to distribute to Pliops’ shareholders.

As a result, the combined value of the two companies, assuming that the share price remains the same, will be around €240M.

Pliops’ value will be approximately $100M, which is more than an 80 per cent decrease compared to its valuation two years ago, report Ctech.

However, the Pliops shareholders could see their stake increase to 40 per cent if predefined strategic objectives are met, with Kalray’s stake adjusting to 60 per cent.

The companies are currently in advanced discussions, with an exclusivity period agreed upon until mid-July 2024.

The integration of Pliops is expected to bring in additional cash, which would cover Pliops’ financial needs for the next 12 months.

It is anticipated that this integration will also start having a positive impact on the turnover and EBITDA of the new group in 2025.

“This merger represents a significant strategic advancement. By combining Pliops and Kalray’s exceptional assets, we are poised to enhance business opportunities for both companies,” states Eyal Waldman, Chairman of Waldo Holdings and former CEO and co-founder of Mellanox (Acquired by NVIDIA).

“KDT is excited to see this merger bring together two companies that can rapidly deliver a robust storage AI acceleration solution to the market,” states Isaac Sigron, Managing Director at KDT ( Koch Disruptive Technologies – KDT), one of the largest shareholder of Pliops.

Pliops: What you need to know

Pliops is an Israeli company specialising in acceleration solutions for AI and storage servers in data centers.

The company’s focus is to enhance AI data access speed, leading to unprecedented levels of performance in AI and data processing.

The company’s technology plays a crucial role in accelerating the next generations of NVMe storage arrays and database applications without requiring infrastructure changes.

The company has garnered support from renowned worldwide shareholders, including AMD, Intel Capital, KDT, NVIDIA, SK Hynix, SBVA, and WD, and has raised approximately $200M since its inception in 2017.

Pliops currently employs around 120 people in Israel, the U.S., and China.

Kalray: What you need to know

Founded in 2008 as a spin-off from the French CEA research lab, Kalray specialises in software and hardware solutions to accelerate data-intensive workflows in Media & Entertainment, High-Performance Computing, and Artificial Intelligence.

With the company’s solution, customers can scale their infrastructures to efficiently meet performance and capacity needs for data-intensive tasks, all without being tied to specific data formats or vendors.

The French company aims to achieve strong annual revenue growth for the 2024 fiscal year.

Based on the billings to date and orders to be recognised by 30 June 2024, the company expects the revenue for the first half of 2024 to be comparable to that of the second half of 2023.

In addition, the parties are considering raising significant funds from various channels to accelerate its development, concurrent with the merger.

Kalray has utilised non-dilutive financing, including signing a revolving bank loan of up to €15M, and is preparing to launch a EuroPP (Euro Private Placement).

“This proposed merger with Pliops represents a major strategic opportunity for our companies. By combining our strengths, we aim to become the global leader in data acceleration solutions for storage and AI GPUs. We are confident that this alliance would offer our customers even more disruptive solutions and present a unique value, including to the most advanced players in the market,” says Eric Baissus, CEO of Kalray. Discussions are at an advanced stage, and we seek to converge them and sign a definitive agreement in the coming weeks.”