Seattle-based supercomputer maker Cray has agreed to a $1.3 billion acquisition by Hewlett Packard Enterprise (HPE), the companies said Friday.

The purchase price, $35 a share, is 17.4% above where Cray’s shares stood at the close of trading Thursday.

The acquisition, subject to shareholder and regulatory approval, would combine Cray’s supercomputing strength, and market position in academia and government, with HPE’s broader portfolio, including its leading position in high-performance computing and roster of commercial customers. Both players are navigating a computing landscape that has been upended over the last decade by the advent of cloud computing from the likes of Amazon Web Services and Microsoft.

“The Cray addition will boost HPE’s ability to pursue high-end procurements and will speed the combined company’s development of next-generation technologies that will benefit [high-performance computing] and AI-machine learning customers at all price points,” said Steve Conway, senior vice president at Hyperion Research Holdings, which advises companies on these technologies.

Cray recently won three major U.S. government contracts, including one to build what would be the world’s fastest and most expensive supercomputer at the Department of Energy’s Oak Ridge National Laboratory. The new system, dubbed “Frontier,” represents a new “exascale” computing era in which systems ingest and analyze massive amounts of data, performing more than a quintillion calculations per second to solve complex models of things like fusion energy and the global climate.

“While these recent wins validate our belief in our next-generation products as well as the wide range of opportunities they will open for us, we continue to face the challenge of scale,” said Peter Ungaro, Cray president and CEO, in a blog post.

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He added that Cray is an engineering company at its core that will benefit from HPE’s size and global reach as it continues to develop its “exascale” systems. “The ability to invest in that road map will be significantly bolstered by HPE’s scale and financial strength, as well as their product breadth and exciting technologies,” Ungaro said.

Ungaro owns about 2% of Cray, a stake worth almost $28.5 million at the acquisition price. Cray’s largest owners are investment giant BlackRock, with 14.7% of the company, The Vanguard Group (10.2%) and Dimensional Fund Advisors (5%).

Cray appeared to be recovering after a period of losses and job cuts in 2016 and 2017 stemming from what Ungaro described as a market slowdown. The company’s revenue grew 16% in 2018 to $455.9 million.

Cray did not immediately respond to questions about the future of its Seattle headquarters, where about 120 of its 1,300 employees work.

The company was founded in 1972 by Seymour Cray, a supercomputing pioneer, in his hometown of Chippewa Falls, Wisconsin, where it still manufactures computers today. The company, known as Cray Research, merged in 1996 with Silicon Graphics, then was sold to Seattle-based Tera Computer Company, which renamed itself Cray Inc.

HPE, based in San Jose, California, is one of two companies that resulted from the 2015 split of Hewlett Packard. The other retained HP’s printing and personal-systems business.