Hewlett Packard Enterprise buys supercomputer maker Cray for $1.3 billion

Hewlett Packard Enterprise Co. on Friday said it would buy Cray Inc., a supercomputer company with roots and a sizable office in the Twin Cities, for $1.3 billion.

Hewlett Packard Enterprise, known as simply HPE, said it expects the purchase to increase its reach with government and academic buyers of high-performance computing systems.

HPE, spun off from Hewlett-Packard Co. in 2015 and based in San Jose, Calif., chiefly provides sophisticated data systems and services to businesses. It will pay $35 a share for Cray, a 17% premium to its share value on Thursday, the day before the deal was announced.

Seattle-based Cray has manufacturing operations in the U.S. and about 1,300 employees worldwide. It had $456 million in revenue in its last fiscal year.

The company was founded as Cray Research in 1972 by Seymour Cray, the longtime leader of the Minnesota computing giant Control Data. It manufactured supercomputers in Chippewa Falls, Wis., Cray's hometown, and had corporate and engineering operations in the Twin Cities.

Cray went through several owners and minor name changes over the past two decades. In recent years, its main local office has been in a new office building next to the Mall of America in Bloomington.

Demand for supercomputers has ebbed and flowed over the decades but is currently rising. HPE said it expects sales of the high-performance computing market to rise about 9% annually into the early 2020s.

Cray recently announced a $600 million contract with the U.S. Department of Energy's Oak Ridge National Laboratory for the world's fastest supercomputer. The system will enable research and artificial intelligence, using a system architecture Cray has dubbed Shasta.

The deal is expected to close later this year and HPE said it will add to its adjusted operating profit in the first full year after closing. The company said it "expects to deliver significant cost synergies through efficiencies," but it was not specific about how it will lower expenses.

HPE also said it expects to incur one-time integration costs that will be absorbed within its fiscal-year 2020 free cash-flow outlook of $1.9 billion to $2.1 billion.

Star Tribune staff writer Evan Ramstad contributed to this report.