Hewlett Packard Enterprise (HPE) confirmed it has reached a definitive agreement to buy the supercomputer manufacturer Cray for $1.3 billion. HPE will pay $35 per share in cash, a premium of 17.4% to Cray’s last closing price.

Cray reported revenue of $456 million in its most recent fiscal year, up 16% year-over-year. The company’s shares are up about 38% this year and up more than 18% on the news.

HPE said it will incur one-time integration costs. Its 2020 fiscal-year free cash flow outlook of $1.9 billion to $2.1 billion remains unchanged, it said.

HPE said the “high performance computing” segment of the market is expected to grow to $35 billion by 2021, from about $28 billion in 2018, driven by an explosion of data from artificial intelligence, machine learning, and big data analytics.

HPE said the acquisition would help it expand its presence in government and academic markets and would allow it to market supercomputing products to commercial clients.

“Cray is a global technology leader in supercomputing and shares our deep commitment to innovation,” HPE’s CEO Antonio Neri said in a statement. “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.”

The company is building the fastest supercomputer ever, a $600 million machine that will be capable of 1.5 quintillion calculations per second, 50 times faster than the next-fastest supercomputer. The “Frontier” supercomputer will be will housed at the U.S. Department of Energy’s Oak Ridge National Laboratory in Tennessee.

HPE said it expects the deal to close by the first quarter of its fiscal year 2020.

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