UPDATE 4-Rackable Systems to buy Silicon Graphics for $25 mln

* Silicon Graphics files for Chapter 11, agrees to sale

* Silicon Graphics lists total debt of $526.5 mln

* Transaction expected to close within 60 days

* Silicon Graphics slump 81 pct; Rackable Systems down 11 pct (Adds background, updates to share closing)

By Bijoy Anandoth Koyitty

BANGALORE, April 1 (Reuters) - Server and data storage products maker Rackable Systems Inc RACK.O on Wednesday said it agreed to buy Silicon Graphics Inc SGIC.O, which filed for bankruptcy protection earlier in the day, for about $25 million in cash.

In a filing with the U.S. Securities and Exchange Commission, Silicon Graphics said it expects to pay off secured creditors with net proceeds from the sale.

Shares of Silicon Graphics, which provides servers, storage and related support, plunged as much as 81 percent, while those of Rackable Systems fell about 11 percent.

"While details of the transaction remain unclear, we view the acquisition as a long-term positive for Rackable Systems shares," analyst Doug Reid of Thomas Weisel Partners wrote in a note to clients.

The acquisition will help Rackable Systems to get a foothold in the $7 billion low-end segment of the high-performance computing market, Reid said.

Sunnyvale, California-based Silicon Graphics has helped customers with high-speed computing tasks, such as tracking tornadoes and aiding in oil and gas exploration.

Silicon Graphics systems were also used to create the epic battle scenes in the movie version of J.R.R. Tolkien's The Lord of the Rings and George Lucas's Industrial Light & Magic's design of the Jurassic Park III dinosaurs.

The deal will also help Rackable Systems diversify its customer base, and it is important since the company's top 10 customers account for more than 70 percent of revenue, said Reid, who has an "overweight" rating on the stock.

For fiscal year ended Jan. 3, 2009, Rackable Systems' top two customers were Microsoft Corp (MSFT.O), which contributed 14 percent, and Amazon.com Inc (AMZN.O), which accounted for 35 percent of its revenue. The government segment contributes about 40 percent of Silicon Graphics' revenue.

BANKRUPTCY REVISITED

Silicon Graphics listed assets of $390.5 million and total debt of $526.5 million in its Chapter 11 filed in the United States Bankruptcy Court for the Southern District of New York, filings showed.