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Cloudera and Hortonworks Announce $5.2B Merger

martinwolf Transaction Analysis
Financial Information*
  • Combined Equity Value                      $5.2B
  • Combined Revenue                            $720M
Transaction Facts
  • Software companies Cloudera (NYSE: CLDR) and Hortonworks (Nasdaq: HDP) announced today they have agreed to an all-stock merger.
  • As a result of the deal, Cloudera stockholders will own 60 percent of the combined company and control five of the nine board seats. In addition, Cloudera CEO Tom Reilly will run the combined company.
  • Meanwhile, Hortonworks stockholders will receive 1.305 common shares of Cloudera for each share of Hortonworks stock owned (based on the 10-day average exchange ratio of their prices through Monday).
  • Stock jumped as much as 25 percent on Wednesday for Cloudera after the announcement, while Hortonworks stock jumped as much as 29 percent in extended hours.
  • The deal is subject to U.S. antitrust clearance and is expected to close in the first quarter of 2019.
martinwolf Analysis
  • Big Merger: Based on Tuesday’s closing prices, the combined company will have a combined equity value of $5.2B. In addition, the combined company will have $720M in yearly revenue and 2,500 customers (although neither company is profitable). 
  • Long-Term Growth: Cloudera went public in April 2017 with shares priced at $15, while Hortonworks went public in 2014 with shares priced at $16. Intel (Nasdaq: INTC) was an early investor in Cloudera and currently owns 17.6% of the company’s outstanding stock. While both companies entered the public market with much promise, they have underperformed this year; as of Wednesday’s close, Cloudera was down 2 percent and Hortwonworks was up 4 percent, compared to the strong 15 percent gain of the Nasdaq Composite Index.
  • Big Data: At their startup stages, both companies got off on a similar foot. They were among the first startups to specialize in Hadoop, an open-source platform that analyzes data in ways to scale up easily. However, the companies have several differences that may be advantageous in the long run. Cloudera offers open source packages with proprietary tools, selling primarily to business managers, while Hortonworks is a pure open source company with products aimed at clients who are big data technologists.
For more information about this transaction, click here to read the press release.
*Financial information from the article.
 

martinwolf  

was not the advisor in this transaction.
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