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Hewlett Packard Enterprise Co. (NYSE: HPE) is ushering in the end of an era by acquiring supercomputer maker Cray Inc. (NASDAQ: CRAY). HPE hopes to create a new era by accelerating its strategy to tackle the most data-intensive challenges for its customers. The company sees the post-merger outfit as offering the most comprehensive end-to-end portfolio in high-performance computing and artificial intelligence.

HPE will acquire Cray in an all-cash buyout for $35.00 per share. The deal will be valued at $1.3 billion, net of cash on hand, and Cray had a market cap of $1.22 billion and a share price of $29.81 ahead of the buyout news.

Investors might notice that the Cray buyout is at a low premium compared to some other mergers. Cray has a prior 52-week high of $30.56 and a consensus target price of $33.67. Cray shares had briefly been above $40 back in 2016.

HPE outlined why it wants Cray in its portfolio. The rise of artificial intelligence, machine learning and big data analytics are significant expansion opportunities and, over the next three years, the HPC segment of the market (and associated storage and services) is expected to grow to $35 billion in 2021 from roughly $28 billion in 2018. HPE also noted that Exascale is a growing segment of overall HPC opportunities and that there is over $4 billion of Exascale opportunities expected to be awarded over the coming five years alone.

HPE said that it expects to deliver significant cost synergies through efficiencies and leveraging proprietary Cray technology (like the Slingshot interconnect) to lower costs and improve product performance. Cray’s headquarters are in Seattle, Washington, and it has U.S.-based manufacturing and approximately 1,300 employees worldwide.

Antonio Neri, president and CEO of HPE, said of the acquisition:

Answers to some of society’s most pressing challenges are buried in massive amounts of data. Only by processing and analyzing this data will we be able to unlock the answers to critical challenges across medicine, climate change, space and more. Cray is a global technology leader in supercomputing and shares our deep commitment to innovation. By combining our world-class teams and technology, we will have the opportunity to drive the next generation of high performance computing and play an important part in advancing the way people live and work.

Shares of HPE were up 2.2% to $14.84 shortly after the opening bell. Cray shares jumped about 17% to $34.90.

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