In a statement, HPE confirmed the companies have entered into a definitive agreement under which HPE will acquire Cray for $35 a share in cash.
As part of the transaction, HPE expects to incur one-time integration costs that will be absorbed within HPE's 2020 fiscal-year free cash flow outlook of $1.9 billion to $2.1 billion, which remains unchanged.
The deal is expected to close by the first quarter of HPE's fiscal year 2020, subject to regulatory approvals and other customary closing conditions.
Cray shares jumped on the news, surging more than 18%, or $5.58, to $35.39 on the Nasdaq Stock Exchange.
Formed in 2015 from the breakup of Hewlett-Packard Co, HPE is slated to reveal its second-quarter earnings next Thursday. The company is expected to post earnings of 51 cents a share, according to the average of analysts surveyed by FactSet.
HPE shares were up 0.89% at $14.66 in early trading on Friday after ending the day Thursday up 0.69% at $14.53.
Shares in Cray are up about 38% this year and closed at $29.81 on Thursday, giving the Seattle-based company a $1.23 billion valuation.