IBM and HashiCorp (a leading multi-cloud infrastructure automation company) announced they have entered into a definitive agreement under which IBM will buy HashiCorp for $35 per share in cash, representing an enterprise value of $6.4 billion.
HashiCorp’s products suite provides enterprises with extensive Infrastructure Lifecycle Management and Security Lifecycle Management capabilities to help organizations automate their hybrid and multi-cloud environments.
The surge of cloud-native workloads and associated applications is expanding the number of cloud workloads enterprises manage. And generative AI deployment continues growing alongside traditional workloads. So, developers are working with increasingly dynamic and complex infrastructure strategies. HashiCorp’s capabilities enable enterprises to use automation to deliver lifecycle management for infrastructure and security, offering a system of record for the critical workflows needed for hybrid and multi-cloud environments. And HashiCorp’s Terraform is the industry standard for infrastructure provisioning in these environments. HashiCorp’s offerings enable clients to take a cloud-agnostic and highly interoperable approach to multi-cloud management and complement IBM’s commitment to industry collaboration (including deep and expanding partnerships with hyper-scale cloud service providers), developer communities and open-source hybrid cloud and AI innovation.
The acquisition of HashiCorp by IBM creates a comprehensive end-to-end hybrid cloud platform built for AI-driven complexity. And the combination of each company’s portfolio and talent will deliver clients extensive application, infrastructure, and security lifecycle management capabilities.
Upon the closing of the deal, HashiCorp is expected to drive synergies for IBM, including across multiple strategic growth areas such as Red Hat, watsonx, data security, IT automation and Consulting. For example, combining Red Hat’s Ansible Automation Platform’s configuration management and Terraform’s automation will improve the provisioning and configuration of applications across hybrid cloud environments. The two companies also expect an acceleration of HashiCorp’s growth initiatives by utilizing IBM’s go-to-market strategy, scale, and reach, operating in over 175 countries across the globe.
This acquisition will create the opportunity to deliver more comprehensive hybrid and multi-cloud offerings to enterprise clients. HashiCorp’s offerings, combined with IBM and Red Hat, will give clients a platform to automate the deployment and orchestration of workloads across evolving infrastructure, including hyperscale cloud service providers, private clouds, and on-prem environments.
This deal will accelerate IBM’s growth profile over time driven by go-to-market and product synergies. And this growth combined with operating efficiencies, is expected to achieve substantial near-term margin expansion for the acquired business. The deal will be accretive to Adjusted EBITDA within the first full year, post-close, and free cash flow in year two.
HashiCorp has 4,400+ clients, including Bloomberg, Comcast, Deutsche Bank, GitHub, J.P Morgan Chase, Starbucks and Vodafone. And HashiCorp’s offerings have widescale adoption in the developer community and are used by 85% of the Fortune 500. These community products across infrastructure and security were downloaded over 500 million times in HashiCorp’s FY 2024.
HashiCorp will be acquired with available cash on hand, and the boards of directors of IBM and HashiCorp have both approved the transaction. This acquisition is subject to approval by HashiCorp shareholders, regulatory approvals, and other customary closing conditions.
The deal is expected to close by the end of 2024.
KEY QUOTES:
“Enterprise clients are wrestling with an unprecedented expansion in infrastructure and applications across public and private clouds, as well as on-prem environments. The global excitement surrounding generative AI has exacerbated these challenges and CIOs and developers are up against dramatic complexity in their tech strategies. HashiCorp has a proven track record of enabling clients to manage the complexity of today’s infrastructure and application sprawl. Combining IBM’s portfolio and expertise with HashiCorp’s capabilities and talent will create a comprehensive hybrid cloud platform designed for the AI era.”
- Arvind Krishna, IBM chairman and chief executive officer
“Our strategy at its core is about enabling companies to innovate in the cloud, while providing a consistent approach to managing cloud at scale. The need for effective management and automation is critical with the rise of multi-cloud and hybrid cloud, which is being accelerated by today’s AI revolution. I’m incredibly excited by today’s news and to be joining IBM to accelerate HashiCorp’s mission and expand access to our products to an even broader set of developers and enterprises.”
- Armon Dadgar, HashiCorp co-founder and chief technology officer
“Today is an exciting day for our dedicated teams across the world as well as the developer communities we serve. IBM’s leadership in hybrid cloud along with its rich history of innovation, make it the ideal home for HashiCorp as we enter the next phase of our growth journey. I’m proud of the work we’ve done as a standalone company, I am excited to be able to help our customers further, and I look forward to the future of HashiCorp as part of IBM.”
- Dave McJannet, HashiCorp chief executive officer
